New deals from DTE Energy, Gabelli free from syndicate, trade above par; Argo Group, PNC list

By Stephanie N. Rotondo

Phoenix, Sept. 26 - The preferred stock market was taking a bit of a breather Wednesday as Yom Kippur resulted in empty desks and no new issues hit the tape.

A trader also noted that several new issues, such as Aflac Inc.'s $450 million 5.5% $25-par subordinated debentures due 2052, have yet to get a recording symbol, meaning it is more difficult to find a firm price for the securities. He said that he thinks some investors are waiting for the symbols in order to determine "whether they should buy, sell or hold."

Another market source said the preferred space was "down a lot most of the day." By the bell, however, the market had rebounded, leaving it just barely up on the day.

Detroit-based DTE Energy Co.'s $200 million issue of 5.25% $25-par 2012 series C junior subordinated debentures due 2062 freed to trade early in the session, as did Gabelli Equity Trust Inc.'s new $105 million of 5% series H cumulative perpetual preferred stock.

"They were doing OK considering what the market was doing," a source remarked.

Meanwhile, several recent deals listed on their respective exchanges. Argo Group US Inc.'s $125 million of 6.5% $25-par 30-year senior notes listed on the Nasdaq exchange on Tuesday, a trader reported, and PNC Financial Services Group Inc.'s recent 5.375% series Q noncumulative perpetual preferred stock hit the New York Stock Exchange.

DTE breaks, moves above par

DTE Energy's new 5.25% $25-par series C notes freed from the syndicate Wednesday.

The deal priced Tuesday at the low end of talk.

A trader saw the issue trading at $25.10 at midday. After the close, a source saw the issue ending at $25.12. However, he said he thought that might be a touch high, noting that the volume-weighted average price was $25.04.

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.

Gabelli frees, does well

Gabelli Equity Trust's 5% series H cumulative preferreds also freed, a trader said.

Traders placed the issue at $25.10 bid.

The deal priced Tuesday.

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.

Gabelli is a non-diversified, closed-end management investment company based in Rye, N.Y.

New listings

Recent deals were seen listing on various exchanges.

A trader said Hamilton, Bermuda-based Argo Group US' latest offering of 6.5% $25-par senior notes due 2042 hit the Nasdaq on Tuesday.

The symbol is "AGIIL." The deal priced Sept. 18.

At midafternoon, the issue was down 9 cents at par. By the close, however, the notes had dropped 19 cents to end at $24.90.

Pittsburgh-based PNC Financial Services' new 5.375% series Q preferreds also listed, hitting the NYSE on Wednesday, as was expected.

The $450 million deal priced Sept. 14. The ticker symbol is "PNCPQ."

The preferreds were trading down 4 cents at midday at $24.76 but ended up a nickel at $24.85.

The securities were among the day's most actively traded.

Also, Hercules Technology Growth Capital Inc.'s 7% $25-par senior notes due 2019 made their way to the NYSE, trading under the symbol "HTGY."

The notes closed at $24.98, versus opening levels of $24.92.

Palo Alto, Calif.-based Hercules priced the $75 million deal on Sept. 19.

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