Qwest deal prices, comes massively upsized; CommonWealth hangs in; Financials end mixed

By Stephanie N. Rotondo

Portland, Ore., June 1 - New issues took the focus in the preferred market on Wednesday.

Qwest Corp. priced its previously announced sale of $25-par 40-year senior notes. The market had been expecting about $200 million of the paper, but when the deal came it was set at $575 million. Traders said demand was great for the notes, thus the massive increase.

Meanwhile, CommonWealth REIT's recent new issue was holding its ground as investors turned their attention towards Qwest for the time being. But a trader said he expected the preferreds to "clean up nicely" in the near term.

Away from new issues, financials were moving about. Ally Financial Inc. and Citigroup Inc. were among the day's most actively traded issues.

Qwest deal comes, gains

Qwest's new issue of $25-par 7.375% senior 40-year notes priced Wednesday and the expected $200 million issue was nearly tripled in size to $575 million.

There is an $86.25 million over-allotment option as well.

"There was a lot of demand there," a trader said. "There seems to be a lot of demand for non-financial names."

The trader quoted the issue at $24.75 bid, $24.85 offered. A bit earlier in the day, a trader pegged the issue at $24.78 bid, $24.87 offered.

"It will do just fine," the second trader said.

"There were a lot of buyers of this paper," another trader said. He added that he "was not surprised" that the deal more than doubled, given the demand.

The Monroe, La.-based telecommunications company announced the deal on Tuesday. Price talk was 7.375% to 7.5%, and the notes came at the rich end of that.

Qwest will use proceeds from the offering to redeem its 7.875% notes maturing this year.

Also in the telecommunications space, United States Cellular Corp.'s 6.95% notes (NYSE: UZA) traded down a dime to $24.87.

CommonWealth hangs in

After freeing to trade Tuesday, CommonWealth REIT's new 7.25% series E cumulative redeemable perpetual preferreds were steady to weaker.

A trader placed the issue at $24.70.

"The market is way off today," he said, opining that a general "lack of interest" could be to blame.

But another trader said the deal was "cleaning up nicely," but noted that with other deals ahead of it, "it just needs time" to catch its wave.

"I like this deal," the trader said.

CommonWealth is a Newton, Mass.-based real estate investment trust.

Financials mixed

Among financial preferreds, Ally Financial's 8.875% series A preferreds fell 2 cents to $26.25, on volume of nearly 2 million shares.

Citigroup's floating rate series J preferreds meantime traded up 4 cents to $26.04, while the Citi series H hybrid preferreds declined $2.77 to $117.73.

Also, a trader said Wells Fargo & Co.'s 5.80% hybrids were "very active" and higher at 92.875. The 9.75% hybrids were "slightly better, they kind of traded sideways" around 107.

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