Prudential prices $25-par notes; deal massively upsized; LaSalle Hotel admitted to NYSE

By Stephanie N. Rotondo

Phoenix, March 7 - A preferred tock trader said that a new deal from Prudential Financial Inc. would "hopefully [turn] the large-issue new issue market back on again."

Prudential said it would sell at least $250 million of the $25-par junior subordinated notes due 2053 on Thursday. Price talk was around 5.75%.

"They'll probably push that to 5.7%, or even 5.65%," the trader said.

Indeed, Prudential did push pricing to 5.7% and the deal was upsized to $650 million.

But a market source said that as much as the deal was increased, it was not enough to totally fund the redemption of the 9% $25-par junior subordinated notes due 2068, of which $920 million is outstanding.

After the market closed Thursday, the Federal Reserve released the latest round of bank stress tests, which showed that most of the bigger banks - including Citigroup Inc. and Bank of America Corp. - were better poised to withstand any major downturns in the economy.

Prudential's new deal

Prudential Financial announced and then priced a $650 million offering of 5.7% $25-par junior subordinated notes due 2053 on Thursday.

Price talk was around 5.75%, but was expected to tighten. Additionally, the size was originally talked at $250 million.

A trader pegged the notes at $24.80 bid, $24.85 offered in the midday gray market. Earlier in the session, he had seen the paper at $24.75 bid, $24.82 offered.

After the bell, a source quoted the issue at $24.83 bid, $24.88 offered.

The source also noted that the Newark, N.J.-based insurance company failed to raise as much as it needed to redeem in full the 9% junior subordinated notes due 2068.

"They needed to get over $925 million and obviously they couldn't do that," he said.

The 9% notes (NYSE: PHR) ended the day down 9 cents at $25.43.

The 5.75% junior subordinated notes due 2052 (NYSE: PJH) meantime were also trading actively, falling 30 cents, or 1.18%, to $25.12.

LaSalle lists on NYSE

In other recent deals, LaSalle Hotel Properties' $100 million of 6.375% series I cumulative redeemable preferreds - a deal that priced Feb. 27 - listed on the New York Stock Exchange under the ticker symbol "LHOPI."

The preferreds were trading at $24.82 at midday, down from opening levels of $24.86. At the close, the issue had traded up to $24.89.

Meanwhile, PS Business Parks Inc.'s new $100 million issue of 5.7% series V cumulative preferreds were seen at $24.90 bid, $24.98 offered.

The deal priced Tuesday and freed to trade on Wednesday.

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