Preferreds strong yet again; American Express deal trades around par; JPMorgan dominates

By Stephanie N. Rotondo

Phoenix, Feb. 26 – The preferred stock market was experiencing some gyrations in early trading on Thursday, but it eventually ended with a firmer tone, as has been the trend all week.

The Wells Fargo Hybrid and Preferred Securities index closed up 18 basis points. The index briefly turned negative at mid-morning but then spent the remainder of the session steadily ramping up.

In trading, American Express Co.’s new $850 million of 4.9% $1,000-par series C fixed-to-floating rate noncumulative preferreds – a deal that priced Wednesday – was trading “just under par,” a trader said early in the day.

“They were pretty aggressive on that pricing,” he noted.

Initial price talk was 5.25%.

After the close, a market source quoted the issue at 99.75 bid, par offered.

Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets and Wells Fargo Securities LLC ran the books.

The dividend begins floating March 15, 2020 at Libor plus 328.5 bps.

Back in the $25-par preferred space, liquidity was rather thin, allowing JPMorgan Chase & Co.’s $1.38 billion of 6.125% series Y noncumulative preferreds (NYSE: JPMPF) to easily dominate trading.

The preferreds rose 2 cents to $25.09 on 1.13 million shares traded.

The deal came Feb. 5 but only began trading at or above par on Wednesday.

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