Public Storage frees to trade; Oxford Lane plans term preferreds; Goldman makes tender offer

By Stephanie N. Rotondo

Phoenix, May 29 - Preferred stocks were still firm on Thursday, though there was a little bit of weakness seeping in around mid-morning.

Early in the session, the Wells Fargo Hybrid and Preferred Securities index was up 9 basis points. Just an hour later, it was up 7 bps.

The rollercoaster continued throughout the day, but the index managed to come out strong, closing up 27 bps.

Public Storage's $250 million of 6% series Z cumulative preferreds, an upsized deal that came Wednesday, freed to trade Thursday, according to a trader.

He quoted the issue at par bid, $25.02 offered.

Later in the day, another market source pegged the shares at $24.95 bid, $25.02 offered.

"It has generally traded a few cents below to a couple cents above that all day ... pretty narrow trading range."

Yet another trader saw the paper at $24.95 bid, $25.05 offered.

The Glendale, Calif.-based real estate investment trust had originally said it would sell just $150 million of the preferreds.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

Meanwhile, Oxford Lane Capital Corp. announced plans to sell series 2024 term preferred shares.

The company must redeem the shares June 30, 2024, but the paper can be called at any time on or after June 30, 2017.

A trader said he hadn't seen anything in the gray market regarding the new issue.

"It's a small deal," he said.

After the close, another trader quoted the new securities at $24.65 bid, $24.85 offered.

Ladenburg Thalmann & Co. Inc. and Deutsche Bank Securities Inc. are the joint bookrunners. Co-managers include BB&T Capital Markets, BTIG LLC, Incapital LLC, Maxim Group LLC and MLV & Co. LLC.

Goldman tender could signal more

Goldman Sachs Group Inc. announced a tender offer Thursday for Goldman Sachs Capital I's 6.345% capital securities.

According to one trader, back in 2008 the new issue market experienced a bit of a "lull." In looking for new ways to package securities, "these different securities houses found blocks of these bonds, moved them into trusts and then issued $25-par preferreds off of these trusts." The 6.345% securities were one such issue that was used to underlie a new preferred issue - several issues, in fact, the trader said.

With the $2.75 billion call being announced, that means the preferreds issued off the underlying securities could be facing redemption soon as well, he said.

One such issue from the trust is Corporate Asset Backed Corp.'s Cabco Trust 2004-101 Goldman Sachs floating-rate callable securities (NYSE: GYB). That issue saw above-average trading on Thursday, gaining $2.11, or 10.64%, to end at $21.91.

For their part, the 6.345% securities due 2034 finished up over 5½ points to about 113.875, according to a market source.

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