New issues from DuPont Fabros, GATX do well; Sunstone Hotel quiet; Public Storage prices

By Stephanie N. Rotondo

Seattle, May 10 – The new issue calendar continued to push out preferred stock offerings on Tuesday.

DuPont Fabros Technology Inc. said it had sold $175 million of 6.625% series C cumulative redeemable preferreds. The deal was first announced on Monday, with price talk initially in a 6.75% to 7% range.

A trader said the issue had freed to trade early in the session, pegging the preferreds at $25.02 bid, $25.05 offered. By the close, the issue had ticked up to $25.05 bid, $25.10 offered.

Stifel Nicolaus & Co. Inc., Raymond James & Associates Inc., Goldman Sachs & Co. and RBC Capital Markets LLC are the joint bookrunners. Co-managers include Robert W. Baird & Co. Inc., Credit Suisse Securities (USA) LLC, Evercore Group LLC, KeyBanc Capital Markets Inc. and TD Securities (USA) LLC.

Meanwhile, Sunstone Hotel Investors Inc. announced it priced a $75 million offering of 6.45% series F cumulative redeemable preferred stock.

Price talk on that paper was initially 6.5% to 6.625%.

Wells Fargo Securities LLC was the bookrunner.

A trader said he had yet to see any markets for the Sunstone preferreds.

“It basically seems like everyone is focusing on [DuPont Fabros and GATX Corp.],” he said. As for the latter, he was referring to the $150 million sale of 5.625% $25-par senior notes due 2066 that priced late Monday from the Chicago-based transportation company.

That issue had freed by early trading as well and was seen in a par to $25.08 context at that point. But the paper came in a bit by the close, ending at par bid, $25.02 offered.

BofA Merrill Lynch and Morgan Stanley & Co. LLC ran the books.

The market also saw a new deal added to the calendar, as Public Storage said it was issuing series C cumulative preferreds.

A trader said he had yet to see any price talk on the deal, though he saw a $24.85 bid in the early gray market.

The deal came after the close, with $200 million preferreds being sold at par to yield 5.125%.

Just ahead of pricing, a trader pegged the issue at par bid, $25.05 offered.

BofA Merrill Lynch, Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Breitburn units fall

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) took a hit in Tuesday trading as the market reacted to the company’s earnings release.

The units fell 33 cents, or 23.24%, to $1.09. Trading in the paper was above-average for the day.

However, trading in the company’s corporate bonds was on the thin side. A trader said the 7.875% notes due 2022 traded only once in small size, ticking up half a point to 8. The 8.625% notes due 2020 also saw “small trades as well,” the trader said, as the issue inched up a quarter-point to 77¾.

Late Monday, the Los Angeles-based MLP reported its first-quarter results, showing a loss of $103.8 million, or 54 cents per share. On an adjusted basis, the loss came to 7 cents per share.

By comparison, net loss in the same quarter of 2015 was $58.83 million and $890.88 million in the fourth quarter of 2015.

Revenue was $148 million, versus $306.28 million for the same period of 2015 and $287.46 million for the previous quarter.

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