Midday Commentary: Market readies for short week; Pitney, Kennedy-Wilson plan offerings

By Stephanie N. Rotondo

Phoenix, Nov. 19 - Preferred stocks were somewhat muted in terms of volume on Monday, as the market prepares for a shortened holiday week due to Thanksgiving.

However, despite the lack of volume, things were trending toward the firm side.

In the primary arena, a trader said he had not seen any markets for new issues announced by Pitney Bowes Inc. and Kennedy-Wilson Holdings Inc.

Pitney Bowes said it would bring at least $75 million of $25-par senior notes due November 2022.

Price talk is 5.25% to 5.375%.

Morgan Stanley & Co. LLC and Bank of America Merrill Lynch are the joint bookrunners. Co-managers are RBC Capital Markets and RBS Securities Inc.

Kennedy-Wilson meantime said it would offer at least $75 million of $25-par senior notes due Dec. 1, 2042.

Price talk is around 7.25%

Morgan Stanley and Bank of America Merrill Lynch are the joint bookrunners.

In recently priced issues, First Republic Bank's new $150 million issue of 5.625% series C noncumulative perpetual preferreds were seen trading at $24.55 at midday.

The issue came late Thursday.

NextEra Energy Capital Holdings Inc.'s $500 million of 5.125% $25-par series I junior subordinated debentures due Nov. 15, 2072 were meantime pegged at $24.60 offered.

That issue priced Wednesday.

And, Wells Fargo & Co.'s $600 million of 5.125% series O noncumulative perpetual class A preferreds were at $24.92 bid.

Recent new deals have not been performing as well as their predecessors, and one trader opined that it was due to an overall "pull back" in the market that was spurred by "uncertainty with taxes and capital gains.

"People may want to put money into [straight] stocks versus income-producing securities," the trader said, noting that there were several articles out over the weekend that indicated common equities were on the cheap side.

Concerns about the so-called "fiscal cliff" were also playing a role, the trader said.

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