Cullen/Frost Bankers price 5.375% preferreds; PartnerRe noncumulatives free up; REITs active

By Stephanie N. Rotondo

Phoenix, Feb. 12 - Preferred stock traders were hearing that the new issue calendar would remain "pretty active," but there were not details on what might be on tap next.

But despite those expectations - and despite the fact that the preferred market was generally firmer on the day - overall trading was deemed "very lethargic" by one market source.

Cullen/Frost Bankers Inc. launched an offering of series A noncumulative perpetual preferreds on Tuesday. The deal was expected to be at least $100 million, with price talk around 5.375%.

A trader noted that there was no selling group on the deal.

The issue priced at the close, coming upsized at $150 million and in line with price talk.

In recent deals, PartnerRe Ltd.'s new $250 million issue of 5.875% series F noncumulative redeemable preferreds freed from the syndicate in early trading.

The deal priced on Monday.

In the secondary, a market source opined that "somebody must have been dumping [real estate investment trust preferreds]," as several were trading busily on Tuesday with no news to drive them.

Away from that, a trader said news pertaining to the preferreds arena was being dominated by talk that Apple Inc. might be considering a preferred offering, given the company's large amount of cash on hand.

"They should [do it]," a trader said. But he added that the iPhone maker might instead choose to use the cash for research and development.

Still, "they could raise a lot of money," he said. "And a convertible deal would not make sense."

Cullen/Frost prices

Cullen/Frost Bankers brought $150 million of 5.375% series A noncumulative perpetual preferreds on Tuesday.

The deal was upsized from $100 million and came in line with previous talk.

A trader quoted the issue at $24.73 bid, $24.85 offered in the gray market as of midday.

At the end of the day, a market source pegged the issue at $24.70 bid, $24.80 offered.

Proceeds will be used to repurchase stock as it pertains to an accelerated share repurchase agreement.

Cullen/Frost is the San Antonio-based holding company for Frost Bank.

PartnerRe frees up

PartnerRe's new $250 million issue of 5.875% series F noncumulative redeemable preferreds freed to trade early in the session.

The deal priced on Monday, coming upsized from $100 million and revised from initial talk of 6% to 6.125%.

A trader saw a $24.98 bid for paper at midday, adding that the shares had traded up to par.

At the close, a source saw the preferreds at $24.95 bid, $25.05 offered.

PartnerRe is a Pembroke, Bermuda-based reinsurance company.

REITs get busy

A market source said that "somebody must have been dumping REITs" during Tuesday's session, as several not-usually-seen names were topping the day's most active list.

DuPont Fabros Technology Inc.'s 7.875% series A cumulative redeemable preferreds (NYSE: DFTPA) were the most active of the day, with over 807,000 shares changing hands. The paper ended the day flat at $26.56.

First Potomac Realty Trust's 7.75% series A cumulative redeemable preferreds (NYSE: FPOPA) were also busy, closing down 9 cents at $25.85.

And, Armour Residential REIT Inc.'s 7.875% series B cumulative redeemable preferreds (OTOTC: ARRPP) rounded out the list, as the preferreds gained 6 cents to end at $24.60.

The Armour issue priced Feb. 8 and is trading on the Other OTC exchange until it officially lists on the NYSE under the symbol "ARRPB."

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