Recent deals stay in focus; Prospect Capital prices; Hartford notes to list; Zions retreats

By Stephanie N. Rotondo

Portland, Ore., April 24 - The preferred stock market was "more green than not," a market source said Tuesday.

However, "away from new issues, there was very little volume," he added.

Recent deals from PNC Financial Services Group, Inc. and U.S. Bancorp continued to dominate. PNC rose, and U.S. Bancorp held steady.

Prospect Capital Corp. meantime priced a $100 million issue of 6.95% $25-par senior notes due 2022. Given the deal's small size, there was very little goings-on in the name.

And Hartford Financial Services Group, Inc.'s $600 million of 7.875% fixed-to-floating-rate $25-par junior subordinated debentures due April 15, 2042 - an issue that priced April 3 - is expected to list on the New York Stock Exchange Wednesday. Trading in the paper was "very volatile," a source said, but "not on the heaviest volume."

Zions Bancorporation announced plans for a new preferred issue that will be sold at auction. Proceeds from the deal will be used to redeem the 11% series E resettable noncumulative perpetual preferreds, which traded down over 5% on the news.

New issues dominate activity

PNC Financial Services' new $1.5 billion of 6.125% fixed-to-floating-rate series P noncumulative perpetual preferred stock traded up 15 cents to $25.15, according to a market source.

Nearly 3.2 million shares changed hands, he added.

Meanwhile, U.S. Bancorp's recent $1.09 billion offering of 6.5% fixed-to-floating-rate series G noncumulative perpetual preferred stock was flat at $25.55, with about 1.59 million shares trading.

PNC's deal priced Thursday. U.S. Bancorp priced April 17.

Among other recent new issues, Pennsylvania Real Estate Investment Trust's $100 million 8.25% series A cumulative redeemable perpetual preferreds - a deal that priced April 13 - also made the day's most active list, trading up a dime to $25.10.

Prospect Capital deal prices

Prospect Capital brought a $100 million issue of 6.95% $25-par senior notes due Nov. 15, 2022, a market source reported Tuesday.

The company announced the deal early on in the session, and pricing came later in the day. Given its small size, traders were seeing very little goings-on in the name.

One trader saw a less 40 bid in the gray market ahead of pricing.

There is a $20 million over-allotment option.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and UBS Securities LLC are the joint bookrunners. The co-managers are Barclays Capital Inc. and RBC Capital Markets LLC. BB&T Capital Markets is the junior co-manager.

Prospect Capital will apply to list the notes on the NYSE. Settlement is expected May 1.

Proceeds will initially be used to maintain balance sheet liquidity and then to make long-term investments in accordance with the firm's investment objective.

Prospect Capital is a New York-based financial services company that primarily lends to and invests in middle-market privately held companies

Hartford to list on NYSE

Hartford Financial Services Group's $600 million of 7.875% fixed-to-floating-rate $25-par junior subordinated debentures due April 15, 2042 will list on the NYSE on Wednesday, a trader said.

At midday, a trader saw paper trading at $26.05.

After the bell, a market source said the securities had been "very volatile." The closing price showed the notes up 65 cents at $26.65. The day's range was $26.03 to $26.96, the source said, and the volume-weighted average price was "dramatically lower" than the closing price at $26.18.

The interest rate on the notes will be fixed until April 15, 2022. It will then be Libor plus 559.6 basis points. The floating rate will be reset quarterly.

Interest payments can be deferred for up to 10 years without an event of default.

Citigroup and Goldman Sachs & Co. were the joint structuring advisers and bookrunning managers. Bank of America Merrill Lynch, Barclays, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were also joint bookrunners.

Proceeds from the sale will be used toward a planned repurchase of 10% fixed-to-floating-rate junior subordinated debentures due 2068.

Hartford Financial is an insurance and financial services company based in Hartford, Conn.

Zions drops on redemption

Zions Bancorporation said Tuesday that it plans to redeem all $142.5 million of its 11% series E resettable noncumulative preferreds (NYSE: ZBPE) using the proceeds of a planned preferred auction.

But investors did not take the news well, pushing the securities down $1.42, or 5.19%, to $25.94.

The Salt Lake City-based bank's board of directors approved an auction of new tier 1 qualifying perpetual preferreds on Tuesday. Additionally, the board agreed to an auction of $100 million 4.5% senior notes due March 27, 2017.

That auction is an add-on to a $400 million issue priced March 27. Proceeds from that sale - scheduled for later this week - will be used to redeem the remaining series D preferreds held by the U.S. Treasury or the redemption of senior floating-rate notes due June 21, 2012.

Westar modestly higher

Westar Energy Inc.'s 6.1% first mortgage bonds due 2047 (NYSE: WRS) inched up slightly in Tuesday trading.

The issue closed at $25.345.

The Topeka, Kan.-based electric utility said earlier this month that it will redeem all $150 million of the $25-par paper on May 15.

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