KKR Financial sells new perpetual preferreds; Duke, TravelCenters free; RBS active, mixed

By Stephanie N. Rotondo

Phoenix, Jan. 10 - New issues continued to emerge in the preferred stock arena on Thursday as KKR Financial Holdings LLC announced a new perpetual deal.

The San Francisco-based finance company said it would issue series A LLC preferreds, with talk originally at 7.625%. Talk was then revised to 7.375%, according to a trader.

"So they tweaked it down quite a bit," he said.

The deal came at revised talk, with $325 million being sold.

Meanwhile, in the secondary realm, Royal Bank of Scotland Group plc continued to dominate all other issues. A market source said that part of what was driving the action was that some issues have been "lagging." Several of said issues are currently non-paying, but there is a belief that the dividends will be turned back on later this year.

KKR sells new preferreds

KKR Financial Holdings brought $325 million of 7.375% series A LLC perpetual preferreds on Thursday.

Price talk was originally around 7.625% but was revised to 7.375%.

Before the price revision, paper was trading at "par or above" in the gray market, the trader noted. Though he had not seen any markets post-revision, he assumed the price could come in a little.

"Originally it was really strong, then it faded," another market source said after the bell and post-pricing. He saw a $24.85 bid shortly before the market closed.

KKR's other issues were trading down a good bit, likely due to investors getting out of one piece to get into the new issue.

The 7.5% senior notes due 2042 (NYSE: KFI) fell 66 cents, or 2.39%, to $26.99, while the 8.375% senior notes due 2041 (NYSE: KFH) lost 41 cents, or 1.44%, to $28.09.

KKR is a San Francisco-based specialty finance company.

Duke, TravelCenters free up

In other recent deals, Duke Energy Corp.'s new $500 million of 5.125% $25-par junior subordinated notes due 2073 freed from the syndicate on Thursday.

The deal priced Wednesday.

A trader saw the issue at $25.25 in midday trading.

And, TravelCenters of America LLC's recent $100 million of 8.25% $25-par senior notes due 2028 had also freed up, after pricing Tuesday.

But that paper had slipped a bit, being pegged at $24.67 at midafternoon.

RBS stays busy, ends mixed

Royal Bank of Scotland paper remained busy in Thursday trading, though the various issues ended in mixed fashion.

The 5.9% noncumulative guaranteed trust preferreds (NYSE: RBSPE) dropped 18 cents to $22.22, while the 6.08% noncumulative guaranteed trust preferreds (NYSE: RBSPG) fell 20 cents to $22.26.

However, the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) inched up 16 cents to $24.75 and the 6.35% series N noncumulative dollar preference shares (NYSE: RBSPN) increased 13 cents to $23.59.

A source said that RBS has been active - and largely higher - of late because many issues were lagging, "certain issues more than others," he said. Specifically, he pointed to the Ts, the 6.08% and 5.9% trust preferreds, and the 6.25% noncumulative guaranteed trust preferreds (NYSE: RBSPI).

Of those four issues, the last three are currently non-paying, he said. "But we're expecting an announcement in May that they will start paying in June," he said.

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