DTE Energy's new notes remain popular, trade above par; Aviva's 8.25% securities rebound

By Stephanie N. Rotondo

Portland, Ore., Nov. 30 - Preferred stocks were generally better Wednesday despite Standard & Poor's downgrade of 37 global banks that came out late Tuesday.

"It was already priced in, I think," a trader said, noting that many had expected the changes.

But what really drove the market was news that central banks across the globe were moving to provide liquidity to financial institutions, sources reported. If the measures work, "we could possibly see this rally continue," a trader remarked.

DTE Energy Co.'s recent issue of $25-par junior notes was continuing to do well, according to traders. Even Aviva plc's latest issue was moving higher with the market.

Investors focus on DTE

DTE Energy's new $280 million issue of 6.5% 2011 series junior subordinated notes due 2061 was "doing well," a trader said. The deal priced Monday.

One trader saw the paper trading at $25.30 in the grey market, while another quoted the issue at $25.30 bid, $25.35 offered.

The new deal has garnered a lot of attention as investors clamor for anything non-financial, especially utilities.

The deal was upsized from $150 million, and there is a $42 million over-allotment option.

The interest payments can be deferred for up to 20 consecutive quarters.

Proceeds will be used to redeem some or all of DTE's trust preferred-linked securities.

Settlement is expected Dec. 7.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. Huntington Investment Co., Mitsubishi UFJ Securities (USA) Inc. and SunTrust Robinson Humphrey Inc. are the co-managers.

DTE intends to list the notes on the New York Stock Exchange.

DTE Energy is a Detroit-based energy and energy technology provider for residential and commercial electric and natural gas.

Aviva rises with market

Aviva's 8.25% subordinated capital securities (NYSE: AVV) were on the rise again Wednesday, closing around $24.15, a trader said.

The paper had been trading around $24.09 in the previous session.

The $400 million offering came Nov. 18. Ahead of its launch, market sources were eagerly anticipating its arrival. The deal was likened to Allianz SE's 8.375% undated subordinated callable bonds, which have done reasonably well. Once Aviva's offering came, however, it fell flat.

One market source has repeatedly said he suspected there were issues with the underwriting. But another source has said he expects the issue will continue to improve, especially once it starts putting out dividends.

The London-based insurer brought the deal via bookrunners Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities.

Proceeds will be used for general corporate purposes. The company expected the funds to be counted toward regulatory capital requirements.

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