Preferreds continue to weaken; Gulf Power prices preference shares; Vanguard offers units

By Stephanie N. Rotondo

Phoenix, June 12 - The midweek trading session saw more selling in the preferred stock market, a trader reported Wednesday.

"Everything is getting slammed right now," he said. "It's a bloodbath."

By the end of the day, the Wells Fargo Preferred Stock index was down 157 basis points, or nearly $40 cents on average for $25-par issues.

Two new deals hit the tape despite the heavy marketplace.

"I think it's silly to bring new issues in this market, with everything getting whacked," a trader said.

Gulf Power Co. announced an offering of $100-par series 2013A preference shares. Price talk was around 5.625%, and pricing was expected late in the day. The issue came shortly before the close, with $50 million shares being sold at par to yield 5.6%.

Vanguard Natural Resources LLC meantime said it was offering series A cumulative redeemable perpetual preferred units.

Price talk was around 7.875%, a trader said.

The trader remarked that he was seeing few markets for the deals - not a surprise given the day's sell-off.

He pegged the Vanguard units at $24.65 offered in the gray market.

The issue had yet to price as of 6 p.m. ET.

Among recently priced deals, Allstate Corp.'s $250 million of 5.625% series A fixed-rate noncumulative preferreds were seen at $24.70 bid.

The issue - which priced a week ago - was trading around par on Monday.

In the secondary, financials remained in focus and most issues were under pressure.

In particular, Royal Bank of Scotland Group plc was active and softer.

RBS slips as CEO plans exit

Royal Bank of Scotland preferreds were down with the market and were likely not much helped by news that Stephen Hester, CEO, was planning to leave his post.

The 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) were down 16 cents on the day at $21.15. The 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) meantime dropped 50 cents, or 2.06%, to $23.80.

Among the company's bonds, the 6 1/8% notes due 2022 fell "over 2 points," a trader said, ending around 98 3/8.

Hester intends to leave the Edinburgh, Scotland-based company by December. RBS chairman sir Philip Hampton told reporters at a press conference the U.K. Treasury played a significant role in making the decision, as it was urging RBS to push up its timeline to return to the private sector.

RBS is 81% owned by the U.K. government.

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