KKR’s new units free to trade; market looks to clean up recent deals; European banks decline

By Stephanie N. Rotondo

Seattle, June 14 – The preferred stock new issue space took a break Tuesday, as the market sought to put away all the issues that have come in the last week.

“Generally, everything is about the same as it was yesterday,” a trader said.

KKR & Co. LP’s $155 million of 6.5% series B perpetual preferred units – a deal from Monday – were freed to trade by mid-morning, according to a trader.

He pegged the issue at $24.92 bid, $24.97 offered.

At the bell, another market source said the paper finished at par.

The deal came tight to the 6.625% price talk and upsized from $100 million.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

From the previous week’s business, Validus Holdings Ltd.’s $150 million of 5.875% series A noncumulative preference shares were seen at $24.75 bid, $24.90 offered. That deal came June 6 and is trading under the temporary ticker “VRHSP.”

Priced June 8, Wells Fargo & Co.’s $1 billion of 5.5% series X class A noncumulative preferreds were “moving up,” a trader said.

He placed the preferreds at $25.15.

Western Alliance Bancorporation’s $175 million of $25-par subordinated debentures due 2056 were meantime seen in a $24.60 to $24.62 context.

That issue came June 9.

In new listings, Ares Management LP’s $275 million of 7% series A preferred units – a deal priced June 1 – hit the New York Stock Exchange on Tuesday.

The ticker symbol is “ARESPA.” Paper was trading at $24.96 at the close, down from opening levels of $25.04.

Banks weaken on Brexit

As the United Kingdom is set to vote on whether or not to leave the European Union next week, concerns about the implications of the so-called “Brexit” were pushing down European bank preferreds.

In Deutsche Bank AG, the 6.55% trust preferred securities (NYSE: DXB) slipped 4 cents to $24.73. The 7.6% trust preferred securities (NYSE: DTK) declined 24 cents to $25.24, and the 8.05% trust preferred securities (NYSE: DKT) lost a quarter to close at $25.74.

Royal Bank of Scotland Group plc paper was also weaker. The 5.75% series L noncumulative dollar preference shares (NYSE: RBSPL) fell 17 cents to $24.80, and the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) waned 7 cents to $25.13.

Barclays Bank plc’s 8.125% series 5 noncumulative callable dollar preference shares (NYSE: BCSPD) meantime dropped 15 cents to $25.71.

HSBC Holdings plc, however, bucked the day’s trend. The floating-rate series F noncumulative preferred stock (NYSE: HUSIPF) – an issue called for June 30 – added 4 cents to finish at $25.20.

The United Kingdom’s Brexit vote is scheduled for June 23. In the past month, opinion polls have showed that the public is increasingly in favor of leaving the European Union.

In the gambling arena, odds of a Brexit have increased to over 40% from around 20% in mid-May.

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