Qwest's notes free up; Public Storage active, listing soon; buyer pushing up Fannie, Freddie

By Stephanie N. Rotondo

Phoenix, June 15 - The preferred stock market was subdued Friday as the market looked to the upcoming election in Greece over the weekend.

"Nobody's doing much heading into the Greek vote," a trader said.

Still, it was a "mostly green day," according to another market source, "although volume was so light."

Qwest Corp.'s new $400 million issue of $25-par 7% 60-year senior notes freed from the syndicate, a trader said. The deal priced Thursday.

Also in recent issues, Public Storage's $250 million of 5.625% series U cumulative perpetual preferreds were among the day's most actively traded securities. The preferred shares are expected to list on the New York Stock Exchange on Monday.

Away from recent issues, a trader said that he was "seeing an uptick" in Freddie Mac and Fannie Mae issues.

"Somebody's out there as a buyer," he said. "Offers are just getting lifted, lifted, lifted."

He added that trading in the preferreds was not particularly heavy, but it was notable that the issues were moving up 25 cents to 40 cents "across the board."

ING Groep NV received a downgrade from Moody's Investors Service Friday. The downgrade was aimed specifically at the company's long-term debt, not its preferred stock, a source pointed out.

The bank's preferreds were declining nonetheless.

Qwest frees from syndicate

Qwest's new 7% $25-par senior notes due 2072 freed up on Friday after pricing - and doubling in size - on Thursday.

The trader quoted the issue at $24.92 bid, $24.95 offered.

The Monroe, La.-based telecommunications provider will apply to list the notes on the NYSE. Settlement is expected June 25.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. Joint lead managers are Raymond James & Associates Inc. and RBC Capital Markets LLC.

Qwest is using proceeds from the sale to redeem its 7.5% notes due 2051 (NYSE: CTW). The issue closed down a penny at $26.01.

Public Storage listing soon

Glendale, Calif.-based real estate investment trust Public Storage is expected to list its new 5.625% series U cumulative perpetual preferreds on the NYSE on Monday.

The expected ticker symbol is "PSAPU." The issue priced June 6.

At midday, a trader said the preferreds were "still hanging right around par," seeing a $25.05 bid for paper.

After the bell, a source said the preferreds made the day's most active list, rising 14 cents to $25.10.

Buyer seeking Fannie, Freddie

A trader speculated that a buyer was picking up Fannie Mae and Freddie Mac paper Friday, as the entities' preferreds rose 20 to 40 cents on the day.

"Every now and then, they have an unusual amount of activity," the trader said, noting that there was no fresh news on the government-backed mortgage buyers.

"Obviously there is [a buyer around]," another source commented. "The point is why is there a buyer around, and that I don't know."

Freddie's 5.7% noncumulative perpetual preferreds (OTCBB: FMCKP), for instance, were up 42 cents, or 20.49%, at $2.47. The 8.375% fixed-to-floating-rate noncumulative preferreds (OTCBB: FMCKJ) earned 11 cents, or 6.15%, to end at $1.90.

Fannie's 7.625% series R noncumulative preferreds (OTCBB: FNMAJ) were up 20 cents, or 16.67%, at $1.40.

ING preferreds pressured

Moody's cut its long-term senior debt rating on ING Groep to A3, along with four other Dutch banks, due to the belief that the country's banking system will face difficulties through 2012 and possibly beyond than that.

Though a source noted that the preferreds were not downgraded, the preferred securities were down nonetheless.

The 8.5% perpetual hybrid capital securities (NYSE: IGK) declined 8 cents in trading to $25.12. The 7.375% perpetual hybrid capital securities (NYSE: IDG), however, managed to tick up 15 cents to $23.67.

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