Ares launches new deal, which attracts little attention; U.S. Bancorp the 'flavor of the week'

By Stephanie N. Rotondo

Portland, Ore., Jan. 26 - Preferreds stocks were gaining ground in early Thursday trading, a trader said, spurred by a "better-than-expected" Italian debt market.

However, some gains faded by the end of the day due to concerns about the U.S. growth outlook and the how the Federal Reserve's plan to keep interest rates at low levels could impact that.

Ares Capital Corp. brought a new deal to market. The company issued $125 million of 7% $25-par senior notes. However, traders saw little goings-on in the name in the gray market.

Among other recent deals, U.S. Bancorp's 6.5% fixed-to-floating series F noncumulative perpetual preferred shares are expected to list on the New York Stock Exchange on Friday. A trader said the issue was the "flavor of the week" and the day's most-traded security.

There have been more than a dozen new issues so far this month. The flurry of new deals has excited many market players. However, a trader said that one issuer that was expected to bring a deal on Thursday - he did not know who the issuer was - decided to postpone the launch. The trader speculated it was because of the amount of supply currently in the market.

Ares brings new deal

Ares Capital sold $125 million, or 5 million, of 7% $25-par senior notes, a source reported Thursday.

The deal, which was announced Wednesday, was upsized from $100 million and came in line with price talk.

One market source said he had not seen any markets in the new deal.

"It's a small deal," he said.

The notes will come due Feb. 15, 2022.

The company has the option to redeem the notes on or after Feb. 15, 2015.

Settlement is expected Feb. 2.

Proceeds will be used to pay down debt under the firm's revolving credit facility or revolving funding facility. Any leftover proceeds will be used for general corporate purposes, including investing in portfolio companies in accordance with the company's investment objective.

The notes will be listed on the New York Stock Exchange.

Ares, a specialty finance company, is based in New York.

U.S. Bancorp to list

A market source said U.S. Bancorp's recent issue of 6.5% fixed-to-floating-rate series F noncumulative perpetual preferreds remained the "flavor of the week," and about 1.9 million of the preferreds turned over during Thursday trading.

He saw the issue trade at $25.50, up about half a percentage point.

Another trader said the deal is expected to list on the NYSE on Friday under the ticker symbol "USBPM."

The Minneapolis-based bank priced the $1.08 billion issue on Jan. 18. Proceeds will be used for general corporate purposes, including the redemption of certain callable trust preferreds.

Elsewhere in the primary market, Aegon NV's $500 million issue of 8% $25-par notes due 2042 ended a bit weaker at $24.60, according to a trader.

The deal freed to trade on Wednesday.

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