Preferred stock players await deals from Aviva, Winthrop; ING declines; DRA suspends dividend

By Stephanie N. Rotondo

Portland, Ore., Nov. 17 - The preferred stock market was again trending downward Thursday, following the lead of the straight equity markets.

"It was another down day," a market source said, though he noted that there was an "uptick in volume."

In the primary market, preferred stock players continued to wait for Aviva plc's new deal that was announced Wednesday. The new issue was expected to price Thursday but had not done so by the end of business.

One market source, however, said he heard the deal was coming at 8.25% - the low end of the 8.25% to 8.375% price talk - and that it was upsized to $400 million from $200 million.

Traders also waited for Winthrop Realty Trust's new deal. The offering was announced Monday, and pricing was anticipated earlier in the week. It had not come by Thursday, and people were beginning to wonder what was going on.

In the secondary market, ING Groep NV's preferreds were trading actively and weaker. A source attributed the decline to comments made by the company's chairman regarding paying back a government bailout.

"The headlines made it sound worse than it was," he remarked.

Aviva deal yet to come

Aviva's planned new issue of 30-year $25-par capital securities was expected to price Thursday but had not come as of press time.

"The books are closed," a trader said, seeing a $24.60 bid in the grey market for the paper.

"It was supposed to price tonight, but because of the market, they might wait until tomorrow," another trader said. "[The new deal] is supposed to be a home run grand slam, but it's trading like crap because of the market."

At another shop, a source said he had heard the deal was coming at 8.25% and that the size doubled to $400 million.

The source quoted the issue at $24.62 bid, $24.72 offered.

The London-based insurer announced the deal on Wednesday, and market players were reportedly eagerly awaiting the launch of the securities.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Proceeds will be used for general corporate purposes. The company expects the funds will be counted toward its regulatory tier II capital requirements.

Aviva intends to list the securities on the New York Stock Exchange.

No word on Winthrop

The preferred market was also waiting for pricing on Winthrop Realty Trust's $50 million issue of series D cumulative redeemable preferreds.

The Boston-based real estate investment trust announced the deal on Monday.

"It's a small house doing it," a trader said. "Maybe they are putting it away themselves."

Another trader said the lack of any details on the deal "seems suspect."

Barclays Capital Inc. and Stifel Nicolaus Weisel are the joint bookrunners.

Proceeds from the new securities will be contributed to the company's operating partnership, which will then use the funds for potential acquisitions, to pay down debt, to repurchase stock and/or for general corporate purposes.

Primary tidbits: KKR, Gladstone

Elsewhere in the primary market, a trader said KKR Financial Holdings LLC's 8.375% 30-year $25-par senior notes were expected to list on the New York Stock Exchange on Friday. The ticker symbol is "KFH."

The trader said the notes were trading around par.

"Not too bad," he said.

Also, Gladstone Capital Corp. reported that its underwriters partially exercised the over-allotment option on its offering of 7.125% series 2016 term preferreds (NYSE: GLADPA).

The $35 million deal priced Oct. 28. With the greenshoe, the company sold about $38.5 million of the preferreds.

ING preferreds sink

A market source said that a speech given by ING Groep's chairman might have put pressure on the company's preferreds.

The 7.375% perpetual hybrid capital securities (NYSE: IDG) dropped 19 cents to $19.00, and the 8.5% perpetual hybrid capital securities (NYSE: IGK) lost 17 cents, closing at $22.65.

The source said the Amsterdam-based firm's chairman, Koos J.V. Timmermans, gave a speech in which he made comments about the company's ability to repay funds received from the Dutch government. However, the source said the ensuing headlines about the comments "made it sound worse than it was."

DRA CRT suspends dividend

DRA CRT Acquisition Corp., formerly known as CRT Properties Inc., said Wednesday that it was suspending the quarterly dividend on its 8.5% series A cumulative redeemable preferreds (Pink Sheets: DCAQP).

The dividend would have been paid Dec. 15. The company said the suspension was done in an effort to improve liquidity and preserve capital.

The preferreds fell $3.00, or 33.33%, to $6.00.

DRA CRT is based in New York.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.