NuStar Logistics brings new deal; Farmer Mac new issue chatter proves true; RBS active

By Stephanie N. Rotondo

Phoenix, Jan. 14 - The week was kicking off with new issues in the preferred stock arena on Monday.

NuStar Logistics LP announced an offering of fixed-to-floating rate subordinated notes due 2043.

Price talk was 7.75% to 7.875%, according to a trader, though he speculated that the talk would be downwardly revised.

The deal was in fact revised, as the offering was priced at 7.625%, with $350 million of the notes being sold.

The trader was also hearing chatter about a new perpetual preferred deal from Federal Agricultural Mortgage Corp., or Farmer Mac as it is commonly referred to.

Price talk on that issue was 5.875% to 6%, but the trader said he expected that could come down as well.

"I thought the coupon was pretty high," he said. "We will probably see a big reduction in that."

The chatter proved to be true, as the company priced $60 million of the preferreds at 5.875%.

Farmer Mac is a Washington, D.C.-based provider of credit in rural America.

Overall, there were "lots of markets" in the preferred space, but "not a lot of trading," according to a trader. He said the market was probably reacting to concerns over the debt ceiling debate and whether or not something could get done before the U.S. is hit with a credit downgrade.

NuStar's new deal

NuStar Logistics brought $350 million of 7.625% fixed-to-floating rate notes due 2043 on Monday.

Earlier in the session, the trader saw the notes trade at $24.90 in the gray market. However, by midday that had come down to $24.80 bid, $24.90 offered.

"There's no selling group," the trader said of what was then an expected $200 million deal. "It should do fine."

After the close, a market source pegged the issue at $24.93.

"Trades have been in the range of there up to par," the source said, adding that there was 'nothing above par."

The interest rate on the $25-par notes will be fixed at 7.625% through April 15, 2018. The rate will then rest to Libor plus 673.4 bps.

NuStar is a San Antonio-based provider of storage and transportation for petroleum products.

RBS busy again

Royal Bank of Scotland Group plc continued to be all the rage in Monday trading.

The 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) fell 11 cents to $22.15, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) dipped 7 cents to $22.20.

The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT), however, inched up 7 cents to $24.82.

RBS is an Edinburgh-based bank that is majority owned by the U.K. government.

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