Rumor mill sees 'huge bank deal'; PS Business Parks prices upsized sale; RenaissanceRe firms

By Stephanie N. Rotondo

Portland, Ore., May 3 - Thursday was an "up" day for preferred stocks, although it continued to be the new issue show, a market source said.

"It's that same pattern we've seen over the past week," he said.

PS Business Parks Inc. brought the day's only new issue, a $350 million offering of 6% series T cumulative perpetual preferreds. The paper traded higher throughout the day but just barely missed hitting par.

Meanwhile, RenaissanceRe Holdings Ltd. reported earnings during the day's session, posting numbers that beat market expectations. As a result, the preferreds traded actively and higher.

There was less trading in Royal Bank of Scotland Group plc paper than there has been over the course of the week. Still, the securities continued to inch higher ahead of Friday's earnings release and expected dividend update as well as on news out Thursday regarding the bank paying back its government bailout funds.

Rumor mill swirls

A market source said he was hearing chatter of a "huge bank deal" that was supposed to come this week.

"Nobody knows which name," he said.

With the week ending on Friday, there are doubts as to whether the rumor could prove true. However, "it makes perfect sense that these guys are going to be issuing more," the source said. "The question is over what time period and how will it relate to what the Fed does [in terms of new financial regulations]?"

PS Business Parks prices

PS Business Parks brought a $350 million offering of 6% series T cumulative perpetual preferred stock on Thursday. There is a $52.5 million over-allotment option.

The deal was originally expected to be a $100 million issue at 6.125%. Traders later said that the deal was upsized to $200 million and pricing tightened to 6%.

At midday, a trader saw paper offered at $24.70 in the gray market, After the bell, a source saw the preferreds higher than that at $24.88 bid, $24.95 offered.

The preferreds will be issued as depositary shares representing a 1/1,000th interest in a preferred. Each depositary share will have a $25 liquidation preference.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunners. Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc. and RBC Capital Markets LLC are the co-managers.

The company will apply to list the preferreds on the New York Stock Exchange under the ticker symbol "PSBPT." Settlement is expected May 14.

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

PS Business Parks is a Glendale, Calif.-based real estate investment trust.

RenaissanceRe up on earnings

RenaissanceRe Holdings put out its quarterly report Thursday, which showed earnings higher than the market anticipated.

On the news, the 6.6% series D preference shares (NYSE: RNRPD) traded actively and better, closing up 14 cents at $25.30.

For the first quarter, the Hamilton, Bermuda-based insurance and reinsurance company reported net income of $201.4 million, or $3.88 per share. That compared to a loss of $248 million, or $4.69 per share, the year before.

Operating profit was $2.98 per share, versus expectations of $2.48 per share.

The quarterly gain was attributed to improved underwriting income of $196.6 million and lower catastrophe losses.

Bailout payback good for RBS

Trading in Royal Bank of Scotland preferreds quieted down some ahead of the company's earnings release, but the Edinburgh-based bank's paper was still climbing higher.

Helping the climb during Thursday's session was news that the company could soon be paying back funds it received from the U.K. government - in full.

One trader, who said the payment could come by the end of the week, said that "if that happens, that would be good for the preferreds."

Of the RBS complex, the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) were the most active, rising 4 cents to $19.32.

© 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.