New preferred issues gaining momentum; Bank of America climbs up again; Excel Trust prices

By Stephanie N. Rotondo

Portland, Ore., Jan. 20 - Preferred stocks were "clearly up," a market source reported Friday, "and pretty much from the open."

New issues were holding in fairly well, with most gaining about a nickel or so. That included recent deals from U.S. Bancorp, First Republic Bank and Stifel Financial Corp.

Away from recent new issues, Bank of America Corp. paper continued to trade higher after the company reported better-than-expected revenues on Thursday. At least one Bank of America issue made the day's biggest percentage gainers list.

In the primary market, Excel Trust Inc. priced $80 million of 8.125% series B cumulative redeemable perpetual preferred stock on Friday, according to a filing made with the Securities and Exchange Commission after the close.

The deal came in line with price talk and was upsized from $50 million.

Wells Fargo Securities LLC, Raymond James & Associates Inc. and UBS Securities LLC are the bookrunners. PNC Capital Markets LLC is the co-manager.

More gains for new issues

A trader said he saw U.S. Bancorp's $1.1 billion issue of 6.5% fixed-to-floating series F noncumulative perpetual preferreds, a deal that priced Wednesday at par, at $25.20.

The trader also remarked that he was hearing rumors of another new deal that could come as early as Tuesday. He said the deal is supposedly structured similarly to U.S. Bancorp. While he was not sure who the issuer is, he speculated that it could be JPMorgan Chase & Co.

After the bell, a source said new issues were up fairly well.

The U.S. Bancorp deal was pegged at $25.25, with a volume-weighted average price of $25.20.

"It inched up a little more," he said. He added that the preferreds were trading in a "narrow range" most of the day, "which is what you would hope for."

The source also saw First Republic's $199.53 million issue of 6.7% series A noncumulative perpetual preferreds trading "all over the place, mostly up." He placed the issue, which priced Tuesday, at $25.20, with a VWAP around par.

And Stifel's $175 million offering of 6.7% $25-par senior notes due Jan. 15, 2022 was called up 5 cents at $25.15. However, the VWAP was $25.07, and the source opined that the average price was "held down" because there were a lot of trades at par.

Bank of America rises again

Bank of America preferreds continued to climb higher, just one day after the Charlotte, N.C.-based bank reported better-than-expected earnings.

The 8.2% series H depositary shares (NYSE: BACPH) gained 35 cents, or 1.46%, to close at $24.30.

The 6.204% series D noncumulative preferreds (NYSE: BACPD) made the day's biggest percentage gainers list, moving up $1.01, or 4.83%, to $21.91.

On Thursday, Bank of America reported a profit of $1.99 billion, or 15 cents per share, compared with a year-ago loss of $1.24 billion, or 16 cents per share.

The gains were due in part to many one-time charges and writedowns, several coming from the asset sales the company did over the year.

Total revenues were $24.89 billion, up 11%.

Additionally, the company announced a cash tender offer for several series of $1,000-par subordinated notes. The prices on offer are at a discount to par for most of the issues.

The tender offer expires Feb. 15.

$25-par notes active, strong

Elsewhere in the preferred stock arena, $25-par notes were trading busily and better.

Goldman Sachs Group Inc.'s 6.5% $25-par bonds due Nov. 1, 2061 (NYSE: GSJ) bucked the general market trend, finishing the day down 20 cents at $25.90.

KKR Financial Holdings LLC's 8.375% $25-par senior notes due Nov. 15, 2041 (NYSE: KFH) meantime gained 79 cents, or 3.05%, ending at $26.65.

"That's pretty high dollar price," a market source said.

Dominion Resources Inc.'s 8.375% 2009 series A enhanced junior subordinated notes due June 15, 2079 (NYSE: DRU) were also higher, improving 4 cents to $29.56.

Aviva plc's 8.25% capital securities due Dec. 1, 2041 (NYSE: AVV) closed out the session up 14 cents at $26.26.

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