AXIS, First Potomac price; Colony, Medley prep deals; RBS issues remain dominant in trading

By Andrea Heisinger

New York, March 12 - Three new deals were announced in the preferred stock market on Monday. One of them, a $400 million issue from AXIS Capital Holdings Ltd., was priced before the close.

Colony Financial, Inc. is planning a sale of cumulative redeemable perpetual preferreds at $25. The size is said to be $75 million with a dividend talked between 8.5% and 8.625%.

Plans for a $30 million sale of $25-par seven-year senior notes were announced by Medley Capital Corp.

In addition, First Potomac Realty Trust gave the terms of the $40 million add-on to its 7.75% perpetual cumulative redeemable preferreds.

The real estate investment trust sector is expected to remain active on the new issue side of the preferred stock market, a trader said.

Other than that, "no one's really doing much," he added. "No one's getting in on these small deals."

Potential buyers are still not feeling secure about the situation in Greece or its bonds, and news about the U.S. deficit spending on Monday did nothing to entice investors.

"People are still skittish to come into this market," a source said. "[But] we are saying that the new issue market will stay strong."

The secondary side of the market was up about 29 basis points on the day, or 7 cents.

"It wasn't huge, but it was a reasonable day - busier than a lot of other days," one trader said.

Public Storage's $400 million of new 5.9% series S perpetual preferreds are expected to list on the New York Stock Exchange on Tuesday, a trader said. The preferreds were sold on Jan. 5.

Among the most active names of the day in trading were Royal Bank of Scotland plc and Public Storage.

First Potomac prices add-on

First Potomac Realty Trust gave the terms of its $40 million, or 1.6 million, of added 7.75% perpetual cumulative redeemable preferreds sold on Friday. They priced at $25.2045, according to an FWP filing with the Securities and Exchange Commission on Monday.

There wasn't trading seen in the added preferreds, a trader said. It was likely due to the small size of the deal, he added.

There is a $5 million over-allotment option.

Wells Fargo Securities LLC was the bookrunner. The joint lead managers were KeyBanc Capital Markets LLC, Morgan Stanley & Co. LLC, Raymond James & Associates and RBC Capital Markets LLC. The co-managers were BMO Capital Markets Corp. and PNC Capital Markets LLC. The junior co-manager was U.S. Bancorp Investments Inc.

The company originally issued $115 million of the preferreds on Jan. 18.

Dividends are payable quarterly.

The preferreds are redeemable on or after Jan. 18, 2016 or in the event of a change of control.

They are listed on the New York Stock Exchange under the ticker symbol "FPOPA."

Proceeds will be contributed to the company's operating partnership, First Potomac Realty Investment LP, in exchange for preferred partnership units. The operating partnership will then use the funds to repay a portion of an outstanding balance under the company's unsecured revolving credit facility and for working capital and general corporate purposes.

First Potomac is a Bethesda, Md.-based REIT.

AXIS' noncumulative deal

AXIS Capital Holdings priced $400 million of 6.875% perpetual noncumulative preferreds, series C, a market source said.

The talk on the dividend was 6.875% as of early afternoon, a source said.

The preferreds have a liquidation preference of $25 each.

Dividends will be paid quarterly starting on July 15.

There is a call option on or after April 15, 2017 at $25 plus accrued dividends.

Wells Fargo was the bookrunner.

Proceeds are being used for the repurchase of series B preferreds in a tender offer.

The holding company for reinsurance subsidiaries is based in Pembroke, Bermuda.

Colony looks at $75 million

Colony Financial plans to sell perpetual series A cumulative redeemable preferreds with a liquidation preference of $25, according to a 424B5 filing with the SEC.

A trader said the size was being talked at $75 million, or 3 million preferreds. The dividend guidance is between 8.5% and 8.625%, he said.

Barclays Capital Inc., Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and UBS Securities LLC are the bookrunners. The co-managers are RBC Capital Markets LLC and Stifel Nicolaus & Co. Inc.

The preferreds will have a dividend paid quarterly starting on July 16. There is a call option beginning in March 2017 at $25 plus accrued interest, and also a change-of-control call.

Proceeds are being used to repay amounts under a revolving credit facility, to acquire target assets, for working capital and for general corporate purposes.

Colony is a real estate investment and financing company based in Santa Monica, Calif.

Medley's $25-par notes

Medley Capital is planning a $30 million sale of $25-par seven-year senior notes, according to a press release and a 497 filing with the SEC.

There is a $4.5 million over-allotment option.

Jefferies & Co. and Janney Montgomery Scott LLC are the bookrunners. BB&T Capital Markets is the senior co-manager. J.J.B. Hilliard, W.L. Lyons LLC, Wunderlich Securities, Ladenburg Thalmann & Co. Inc. and Dominick & Dominick LLC are the co-managers.

The notes have a call option on or after March 30, 2015.

The company intends to list the notes on the New York Stock Exchange within 30 days under the symbol "MCQ."

Proceeds are being used to repay a portion of debt under a credit facility.

The closed-end management investment company is based in New York.

RBS leads trading volume

Royal Bank of Scotland continued its streak as one of the most actively traded names in the preferred stock secondary.

A source said that three of the day's top five most active issues were from the bank.

The RBS series E preferreds saw 1.5 million shares trade, ending the day up 8 cents at $13.62. The RBS series G preferreds had 1.17 million shares trade and were up 7 cents on the day at $13.74. The fifth most active preferreds were the RBS series T preferreds, which had 541,000 shares trade and ended at $18.14, or down 1 cent on the day.

The second most active preferreds were the 1.18 million traded of Public Storage's series M preferreds. They were down 40 cents on the day at $25.03.

Ally Financial Inc.'s series A preferreds had 995,000 shares change hands. They ended at $23.35, or down 17 cents on the day.

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