Kilroy prices preferreds; Prudential brings $1,000-par notes; Standard Chartered loses ground

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 secure 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.

Another market source said preferred stocks were gyrating throughout the day, though he added that the market was "up the whole time versus the open - but not by much."

Ultimately, the day ended essentially flat, he said.

The source also said that volume was "very low."

"It was one of the lowest-volume days in God knows how long."

In the primary, Kilroy Realty Corp. priced a sale of $100 million of 6.375% series H cumulative redeemable perpetual preferreds. The deal came at the tight end of talk.

Prudential Financial Inc. also priced a deal, a $1 billion issue of 5.875% fixed-to-floating junior subordinated notes due 2042.

The issue was $1,000-par and was "doing well," a market source said.

Among other $1,000-par issues, Standard Chartered plc's securities were weakening on news the company might be suspended for being involved in $250 billion of transactions with Iranian banks over seven years in violation of federal money-laundering laws.

Kilroy prices new issue

Kilroy Realty priced $100 million of 6.375% series H cumulative redeemable preferreds, the company said on Monday.

"There's no selling group, so I'm not seeing a lot of [trades] out there," a trader 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.

Kilroy is a Los Angeles-based real estate investment trust.

Prudential's $1,000-par deal

Prudential Financial priced $1 billion of 5.875% $1,000-par fixed-to-floating junior subordinated notes due Sept. 15, 2042.

A market source quoted the issue at 100.375 bid, 100.75 offered, adding that the deal was "obviously doing well."

In a prospectus filed with the Securities and Exchange Commission, the company said that the notes will bear interest at 5.875% until Sept. 15, 2022, at which point the rate will rest to Libor plus 417.5 basis points.

Interest is payable semiannually on March 15 and Sept. 15 when the rate is fixed. Once it starts floating, interest will be payable quarterly on the 15th of March, June, September and December.

Goldman Sachs & Co., Bank of America Merrill Lynch, HSBC Securities (USA) Inc., Citigroup Global Markets Inc. and UBS Securities LLC are the joint bookrunners. The co-managers are Mitsubishi UFJ (USA) Securities LLC, Mizuho Securities USA Inc., RBS Securities Inc. and SMBC Nikko Capital Markets Ltd.

Proceeds will be used for general corporate purposes and to redeem outstanding retail medium-term notes, including those under the InterNotes program.

Prudential is a Newark-based financial services company.

Standard falls from grace

Standard Chartered's 6.409% $1,000-par fixed-to-floating perpetual bonds were slipping Monday as the company faced charges of money laundering.

A market source pegged the issue down about a point at 97 bid, 97.5 offered.

New York regulators issued an order warning Standard Chartered that its U.S. unit could be suspended from doing business within the state due to claims that the company has conducted $250 billion of transactions with Iranian banks.

The transactions are said to violate federal money-laundering laws, as the bank earned millions of dollars of handling costs for institutions that are subject to U.S. sanctions.

Last week, the bank said it was "conducting a review of its historical U.S. sanctions compliance and is discussing that review with U.S. enforcement agencies and regulators."

Taubman frees to trade

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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