Southern California Edison taps market; RBS, Freddie Mac release earnings; market eyes CHS

By Christine Van Dusen and Stephanie N. Rotondo

Atlanta, Feb. 27 - Southern California Edison Co. printed new securities on a high-volume Thursday for the preferred stock market, which ended the session up about 17 basis points, or 4 cents.

"The volume for paying securities was high," a market source said.

One of the most active issues at the end of the day was Citigroup Inc.'s noncumulative preferreds, series K, which finished up 2 cents at $25.84 on 1.3 million shares.

The new issue from Allstate Corp. - $650 million of 6.625% series E noncumulative preferreds that came Monday - ended Thursday up 3 cents at $24.88 on 979,000 shares traded.

Among other recently priced deals, State Street Corp.'s new $750 million issue of 5.9% series D fixed-to-floating rate noncumulative preferreds were seen at $25.38 bid, $25.50 offered on Thursday.

In other news, Royal Bank of Scotland reported earnings that showed losses totaling $13.64 billion.

"This shocked the equity market," a market source said. "The preferreds market was a little more mixed on it."

The most active of RBS's preferred issues was its 6.4% non-cumulative dollar preference shares, series M, which dropped 7 cents on the day to $22.70 on volume totaling 332,000.

Also on Thursday, Freddie Mac reported an $8.6 billion profit for the fourth quarter on Thursday. In response, the agency's preferreds - as well as those of sector peer Fannie Mae - were "all up 50 cents to 70 cents," a trader said.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 81 cents, or 7.01%, at $12.36. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose a buck, or 9.09%, to $12.00.

SoCal Edison does deal

In it new issue, Southern California Edison priced $275 million fixed-to-floating rate cumulative trust preference securities with a 5.75% dividend in a Securities and Exchange Commission-registered deal, a market source said.

The securities were issued to the public via the SCE Trust III subsidiary.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets and Wells Fargo Securities LLC are the joint bookrunners.

When declared, the dividends will be paid out on the 15th day of March, June, September and December, beginning June 15. The dividend rate will be fixed until March 15, 2024, at which time the rate will begin floating at Libor plus a spread.

The trust securities cannot be redeemed unless the parent company chooses to redeem the underlying series H preference shares. On or after March 15, 2024, the company can redeem the Hs at par plus accrued dividends or prior to that date in the event of certain tax or investment law changes.

The trust preference shares will be listed on the New York Stock Exchange under the ticker symbol "SCEPH."

Proceeds will be used to repay commercial paper borrowings and for general corporate purposes.

Southern California Edison is a subsidiary of Rosemead, Calif.-based Edison International Inc.

CHS revises plans

Meanwhile, CHS Inc. revised is previously announced offering of series 2, class B cumulative redeemable perpetual preferreds, upping the deal to as much as $350 million.

The company had originally registered $250 million of the preferreds on Feb. 12.

"That deal still hasn't come to the market," a market source said. "We're waiting - maybe someday."

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