Kayne Anderson prices new deal; Zions readies auction for $25-par notes; secondary quiet

By Stephanie N. Rotondo

Phoenix, Sept. 9 - The preferred stock market saw signs of the primary space coming back to life on Monday.

Kayne Anderson MLP Investment Co. announced plans to sell series G mandatorily redeemable preferreds early in the session. Though a trader said he had yet to hear any official price talk, he was seeing a $24.60 gray market bid for the $25-par paper.

The deal came after the close, with $50 million of the preferreds being priced at par to yield 6.4%.

Meanwhile, Zions Bancorporation said it had scheduled an online modified Dutch auction of up to $250 million fixed-to-floating rate $25-par subordinated notes due 2028. The company said proceeds from the sale would be used for general corporate purposes, which includes a possible redemption of outstanding securities.

Last month, the Salt Lake City-based bank called all $799.5 million of its 9.5% series C noncumulative perpetual preferreds for Sept. 15. The call price is par plus approximately 61 cents.

The issue (NYSE: ZBPC) closed Monday trading off a penny at $24.99. As for the bank's other issues, only the floating-rate series A noncumulative perpetual preferreds are currently callable, of which there is $240 million outstanding.

The online auction will begin Wednesday and end Thursday.

A trader said the emergence of the deals could signal that the new issue calendar was getting ready to heat up again.

"The secondary has settled in and people are more willing to test the primary market," he said.

But while the primary was starting to see an uptick in activity, a market source noted that the day's liquidity in the secondary was thin, aside from a huge chunk of U.S. Bancorp's floating rate series B noncumulative perpetual preferreds (NYSE: USBPH), which traded up a nickel to $18.75.

The source said he had not heard any news to cause the massive volume - over 5.47 million shares changed hands - and speculated that it "could be somebody rearranging their portfolio."

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