Midday Commentary: Knight's lifeline positive for market; Kilroy to price deal; Taubman frees

By Stephanie N. Rotondo

Phoenix, Aug. 6 - A trader said that preferred stocks were trending up on Monday, though he was not sure what the catalyst was.

On the one hand, he noted that there were rumors sparked by comments made on Twitter that Syrian president Bashar al-Assad had been shot, though he said there was no confirmation. However, if that were to happen, there would be a spike in oil prices and possibly a resulting sell-off, he said.

He also noted that Knight Capital Group Inc. was able to secured funding via a $400 million sale of convertible preferred stock.

"That's a plus because the liquidity they provide the market is very important," he said.

Among preferred stock dealings, Kilroy Realty Corp. announced plans to sell at least $75 million of series H cumulative redeemable perpetual preferreds.

Talk is between 6.275% and 6.5%, according to a trader.

"There's no selling group, so I'm not seeing a lot of [trades] out there," he said. He remarked that there was a $24.70 bid for paper in the gray market early in the session.

The joint bookrunners are Wells Fargo Securities LLC, Barclays, Bank of America Merrill Lynch and J.P. Morgan Securities LLC.

Proceeds will be used to redeem all of the operating partnership's outstanding series A preferred units, and any remaining net proceeds will be used for general corporate purposes, including repaying borrowings under the operating partnership's revolving credit facility.

Taubman frees

Meanwhile, Taubman Centers Inc.'s $175 million of 6.5% series J cumulative redeemable perpetual preferreds, a deal that priced Friday, freed from the syndicate on Monday, a trader reported.

The issue was offered at $24.95.

Morgan Stanley & Co. LLC and Wells Fargo are the joint bookrunners. PNC Capital Markets LLC is the co-manager.

Proceeds will be used to redeem all or a portion of $187 million series G and H preferreds. If there are any remaining funds, the company will use the money to reduce outstanding borrowings under a $715 million revolving line of credit and/or for general corporate purposes.

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