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Midday Commentary: DTE Energy plans sale of $25-par junior debentures; Gabelli prices new issue
By Stephanie N. Rotondo
Phoenix, Sept. 25 - More and more new issues were coming into the preferred stock market Tuesday, and a trader said he heard that was not going to let up any time soon.
However, he was surprised that there wasn't generally more activity in the preferred realm given that the end of the month and quarter are just days away.
"Nothing is really shaking," he said.
DTE Energy Co., a Detroit-based utility, said it will issue at least $150 million of $25-par 2012 series C junior subordinated debentures due Dec. 1, 2062.
Price talk is 5.25% to 5.375%, according to a trader. He said he expected pricing to be later Tuesday, at the tighter end.
Already the issue was trading at $24.95 in the gray market, he added.
Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. The co-managers are BNY Mellon Capital Markets LLC, Comerica Securities, Deutsche Bank Securities Inc. and Mitsubishi UFJ Securities.
Proceeds will be used to pay a portion of the purchase price for a portfolio of onsite energy projects, to repay short-term borrowings and for general corporate purposes.
Meanwhile, Gabelli Equity Trust Inc. brought $105 million of 5% series H cumulative perpetual preferred stock.
The deal came at the tight end of talk and was upsized from $50 million.
That issue was seen offered at $25.05 at midafternoon.
Bank of America Merrill Lynch is the bookrunner.
Proceeds will be used to redeem the company's 6.2% series F cumulative preferreds. Any remaining funds could be used for further preferred redemptions.
The series F preferreds (NYSE: GABPF) continued to feel weak, losing 4 cents by midday to trade at $25.46.
Gabelli is a non-diversified, closed-end management investment company based in Rye, N.Y.
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