PS Business Parks to price new deal; Public Storage 'doing well'; RBS, foreign issuers up

By Stephanie N. Rotondo

Portland, Ore., Jan. 9 - It was a "steady march up" for preferred stocks again on Monday, according to a market source.

However, he added that volume was "on the lighter side. Not light-light, but lighter."

The primary market was abuzz as PS Business Parks Inc. announced plans to sell at least $100 million of series S cumulative redeemable perpetual preferreds. The issue is expected to price Tuesday, and talk is around 6.5%. Proceeds will be used for general corporate purposes, including the redemption of outstanding preferred securities.

Public Storage's recent $400 million issue of 5.9% series S cumulative preferreds was "doing well," a trader said. Some of Monday's trades even hit par, another source said.

In secondary dealings, Royal Bank of Scotland Group plc and other foreign financials were faring better. The gains came as European leaders met to discuss the region's financial crisis and steps that can be taken to stem it.

PS Business to bring new deal

PS Business Parks intends to sell at least $100 million of series S cumulative redeemable perpetual preferreds.

Price talk is around 6.5%, according to a market source. He noted that it was a "small deal with a small selling group."

He saw a $24.80 trade in the gray market, remarking that the deal was "doing pretty well."

Another trader saw markets ranging between $24.75 and $24.90.

A third market source quoted the issue at $24.75 bid, $24.85 offered.

Pricing is expected Tuesday.

The preferreds will be issued as depositary shares each representing 1/1,000th of a preferred. The liquidation preference is $25 per depositary share, according to a prospectus filed with the Securities and Exchange Commission on Monday.

Dividends will be payable quarterly beginning March 31. The company can redeem the preferreds beginning in January 2017 at par plus accrued dividends.

There is no stated maturity and no sinking fund or mandatory redemption clause.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used for general corporate purposes, including the repayment of outstanding debt, the redemption of preferred securities and the acquisition of commercial properties.

The company then announced the redemption of all of its outstanding 7.375% series O cumulative preferreds. The redemption will take place Feb. 13. The redemption price will be par plus accrued dividends from Jan. 1.

The Glendale, Calif.-based real estate investment trust plans to list the new preferreds on the New York Stock Exchange under the ticker symbol "PSBPS."

Public Storage a 'good deal'

Public Storage's recent $400 million offering of 5.9% series S cumulative perpetual preferreds - a deal that priced Thursday - was doing well in Monday trading.

Shortly before the market closed, a trader said the deal was trading at $24.95.

"That isn't too bad," he said.

After the bell, another trader quoted it at $24.83 bid, $24.98 offered.

"It's a wide spread, but it should do well," he said. "It's a good deal."

A third market source said the issue was trading in a range of $24.85 to $25.00. He noted that the volume-weighted average price for the day was $24.91.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

The preferreds were sold as depositary shares each representing a 1/1,000th interest in a cumulative preferred share of beneficial interest, series S.

Settlement is expected Thursday.

Proceeds will be used to make investments in self-storage facilities and in entities that own self-storage facilities, to redeem preferred securities and for other general corporate purposes.

The Glendale, Calif.-based REIT intends to list the preferreds on the New York Stock Exchange.

On Thursday, Public Storage announced that it will redeem its $206.67 million of 6.75% series L cumulative preferreds (NYSE: PSAPL) on Feb. 9.

RBS, foreign issuers gain

Royal Bank of Scotland and other foreign issuers were on the rise Monday. The improvements were attributed to optimism that European leaders could come up with a plan that would ease the European financial crisis.

RBS issues were up as much as 9.34% on the day. The 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) gained 92 cents, or 9.34%, to close at $10.77.

The 6.4% series M noncumulative dollar preference shares (NYSE: RBSPM) moved up $1.02, or 8.33%, to $13.27.

Among other foreign issuers, UBS AG's floating-rate noncumulative trust preferreds (NYSE: UBSPD) rose 40 cents, or 3.48%, to $11.89.

On Monday, German chancellor Angela Merkel and French president Nicolas Sarkozy met for the first time in 2012 to discuss Europe's crisis and how to speed up measures aimed at easing the pain.

After the meeting, Sarkozy said a deal could be inked as early as March 1.

"If that happens, it would help," a trader said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.