Market falls as Yellen makes first Fed statement; Digital Realty sells cumulative issue

By Stephanie N. Rotondo

Phoenix, March 19 - Preferred stocks were trending toward the flat side on Wednesday as the market waited to see what Janet Yellen, the new Federal Reserve chairman, would say in her first press conference since replacing Ben Bernanke.

"It's kind of a non-event day," one trader said. "People are waiting to see what Yellen says."

The Wells Fargo Hybrid and Preferred Securities index was trading down 1 basis point as of mid-morning.

The index continued to fall after Yellen made her statement, in which she said the central bank would no longer use unemployment as its sole guide when deciding to raise interest rates.

The Fed also continued to taper its bond-buying program.

The Wells Fargo index finished the day down 12 bps.

The primary market saw a new deal enter the mix as Digital Realty Trust Inc. said it was selling series H cumulative redeemable preferred stock. Price talk was 7.375% to 7.5%, according to a trader.

He pegged the issue at $24.80 bid in the early gray market.

"It should do well," he opined.

At 3 p.m. ET, a market source said the deal had launched at 7.375% with $300 million shares being sold.

The source saw a gray market quote of $24.75 bid, $24.80 offered.

BofA Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds from the offering will be contributed to the operating partnership, which will use the funds to repay borrowings under a global revolving credit facility, to acquire additional properties, for development opportunities and/or for general corporate purposes, including the potential repurchase or redemption of outstanding debt or preferred securities.

Verizon gets busy

Verizon Communications Inc.'s 5.9% $25-par notes due 2054 (NYSE: VZA) were the most actively traded issue among paying securities, according to a market source.

About 1.82 million of the notes changed hands.

The issue closed down 3 cents at $24.84.

The source said that there was "one rather large trade" in the paper, and given that each trade is counted twice - once for the sell and once for the buy - that made up nearly all of the trading in the issue.

As for what fueled that large trade, the source said there was a lot of speculation about who might have initiated it. He said he heard that it was either a corporate bond buyer or that it was a syndicate looking to divest its position.

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