Atlas Resource selling preferred units; Dominion prices $1,000-par notes; RBS firms on IPO

By Stephanie N. Rotondo

Phoenix, Sept. 24 – The primary preferred stock market saw a couple more deals added to the calendar early Wednesday.

Atlas Resource Partners LP announced plans to sell at least $50 million of class D cumulative redeemable perpetual preferred units, talked in an 8.625% area.

Morgan Stanley & Co. LLC and UBS Securities LLC are leading the non-rated deal.

Pricing is expected on Thursday.

Proceeds will fund a portion of the company’s planned purchase of assets in the Eagle Ford Shale region of south Texas.

Meanwhile, Dominion Resources Inc. announced and priced $685 million of 5.75% $1,000-par series A enhanced junior subordinated notes due Oct. 1, 2054.

Barclays, Morgan Stanley, UBS Securities and Wells Fargo Securities LLC are managing that deal.

Through Oct. 1, 2024, interest will be payable semiannually at a fixed rate. After that date, the interest rate will float at Libor plus 305.7 basis points and will be payable quarterly.

Proceeds will be used for general corporate purposes, including the redemption of the 8.375% 2009 series A enhanced junior subordinated notes due 2064 (NYSE: DRU).

That issue was trading off 51 cents, or 1.98%, to $25.20.

After the market closed, a source pegged the Dominion issue at 100.25 bid.

Among other deals from the week, Qwest Corp.’s $500 million issue of 6.875% $25-par senior notes due 2054 were quoted at $24.50 bid, $24.55 offered.

The notes priced Monday and freed to trade on Tuesday.

After regaining some ground in Tuesday trading, the preferred stock market resumed its downward descent on Wednesday.

The Wells Fargo Hybrid and Preferred Securities index ended down 11 bps. Still, the index was “probably off twice that at late morning,” a source said.

Overall volume was “pretty decent; it picked up pretty broadly.”

Citizens IPO seen as positive

Royal Bank of Scotland Group plc’s 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) were better in active trading, rising 7 cents to $24.09.

The gains came as the company’s sale of 25% of its stake in Citizens Financial hit the market. But the initial public offering’s price per share was decreased to $21.50, down from a $23.00 to $25.00 range announced earlier in the month.

RBS had hoped to raise over $3.5 billion for the regional bank but instead raised just over $3 billion.

Still, the “IPO is a positive from a credit perspective,” a market source said.

The Edinburgh, Scotland-based bank hopes to divest its entire stake in the company by 2016.

Among other United Kingdom-based banks, HSBC Holdings plc’s floating rate series F noncumulative preferreds (NYSE: HUSIPF) dominated midweek trading, with well over 2 million shares being exchanged.

The preferreds ended the day up 18 cents at $22.02.

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