Public Storage prices at low end of talk, gains traction; ING Groep preferreds head higher

By Stephanie N. Rotondo

Phoenix, June 6 - A trader said the preferred stock market "kind of popped just with the overall market" during trading on Wednesday.

"It was largely a green day," another market source said.

In the primary space, Public Storage priced a $250 million issue of 5.625% series U cumulative preferreds. Pricing came at the low end of talk, which disappointed some market watchers.

In secondary dealings, a trader said that ING Groep NV put out a report that claims its Spanish portfolio is performing better than expected. As such, the bank's preferreds traded upward.

A source noted that Thursday will bring a Federal Reserve meeting, thought to be the long-awaited notice of public rulemaking on Basel III. The source said that the preferred market could be on the muted side ahead of the midday meeting, though he also remarked that the market is "confident" that its current interpretation of how the rules will affect tier 1 capital raising will in fact be confirmed. Given that, trading could continue as if nothing was happening.

"I wouldn't be surprised either way," he said.

Public Storage prices, rises

Public Storage brought a $250 million offering of 5.625% series U cumulative perpetual preferreds (/BBB+/) on Wednesday.

The deal was first announced Tuesday. Pricing came at the low end of talk, to the disappointment of one market source.

As previously reported, the source expressed dismay that the Glendale, Calif.-based real estate investment trust would attempt to bring such a low dividend.

"They're usually a little more reasonable," he said on Tuesday after the deal was announced.

After pricing, a trader saw the paper trading at $24.65 bid, $24.70 offered in the gray market.

"It's a strong name," the trader said. "Those levels, for a name like Public Storage, it's not bad."

After the close, a source quoted the issue at $24.68 bid, $24.74 offered.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. Wells Fargo is the lead on the deal.

J.P. Morgan Securities LLC and RBC Capital Markets are the co-managers.

Proceeds from the sale will be used to redeem $172.5 million of 7% series N cumulative preferred shares. Any remaining funds will be used for general corporate purposes, which may include investments in self-storage facilities and other possible redemptions.

The series N preferreds (NYSE: PSAPN) were unchanged at $25.42.

ING pushes higher

A trader said that Amsterdam-based bank ING Groep said Wednesday that its Spanish portfolio is doing better than expected.

That bit of information helped the company's preferreds move upward. The 7.375% perpetual hybrid capital securities (NYSE: IDG) gained 23 cents, or 1%, to close at $23.20. The 8.5% perpetual hybrid capital securities (NYSE: IGK) rose 24 cents to $24.93.

For their part, Spain's government bonds were higher for the third straight session as a plan to protect the region's banks was gaining European support.

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