Gabelli Utility prices new issue; DTE Energy notes trade up; Hersha Hospitality frees up

By Stephanie N. Rotondo

Seattle, May 25 – The preferred stock market had a modestly firm tone to it on Wednesday.

“Everything is green,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index ticked up 5 basis points.

A new deal was announced around midday. Prior to that, a trader said he had not heard of any issues coming.

“I have heard nothing for today yet,” the trader said. “I think if we do see any deals, it’s going to be in drips and drabs, like these little [real estate investment trusts] and the odd-ball insurance company.”

But Gabelli Utility Trust did sneak in a deal, a $50 million issue of 5.375% series C cumulative preferreds.

Price talk was around 5.5%.

Morgan Stanley & Co. LLC ran the books.

Upon pricing, a trader quoted the issue at $24.85 bid, $24.95 offered.

Another trader opined that the deal was “tightly held.”

“That wouldn’t surprise me,” another market source said. “It’s a small deal from a closed-end fund.”

As for deals from earlier in the week, DTE Energy Co.’s $300 million offering of 5.375% $25-par 2016 series B junior subordinated debentures due June 1, 2076 were pegged in a $24.90 to par context.

After the close, a source said the notes were up 4 cents at $24.94.

That issue came Monday via BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC.

From Tuesday’s business, Hersha Hospitality Trust’s $175 million of 6.5% series D cumulative redeemable preferreds were seen wide at $24.75 bid, $24.90 offered.

Once the issue freed around midday, the market tightened to $24.75 bid, $24.80 offered.

One source said the paper finished the session “pretty much flat” at $24.74.

Morgan Stanley, BofA Merrill Lynch, Raymond James & Associates Inc., Wells Fargo and Citigroup Global Markets Inc. ran that deal.

Meanwhile, deals priced last week by LaSalle Hotel Properties and American Homes 4 Rent began trading on the New York Stock Exchange on Wednesday, as was expected.

LaSalle – priced May 18 – listed under the symbol “LHOPJ.” American Homes listed under the symbol “AMHPD.”

American Homes came May 17.

The LaSalle issue closed at par, down from opening levels of $25.07. American Homes traded up to $25.44 from opening levels of $25.34.

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