Preferred market regaining ground; trader sees new issue pipeline reopening; JPMorgan up

By Stephanie N. Rotondo

Phoenix, Oct. 18 - A preferred stock trader said the market was up Friday as investors continued to react positively to the recently inked debt deal that allowed the U.S. government to reopen and to avoid hitting its borrowing capacity.

The trader noted that BlackRock had put out a report that stated that because of the over two-week long government shutdown and the ensuing drama, the Federal Reserve would likely continue its quantitative easing program though 2015. Still, he said there was some fear that the recent government debacle could be repeated in six months when the debt limit comes up again.

However, he speculated that "people will start reaching for yield" instead of sitting on the sidelines.

He also said that he was expecting new issues to resume "probably next week."

Power REIT did announce a deal Friday, a sale of series A cumulative redeemable perpetual preferreds. However, the company said it intended to market and place the deal by itself.

A trader said he had not even heard of the deal, opining that it was going to be a small issue.

As of midday, the Wells Fargo Hybrid and Preferred Securities index was up 52 basis points. By the close, it was up 70 bps.

JPMorgan to settle claims

JPMorgan Chase & Co.'s preferreds were on the rise Friday.

The series A preferreds (NYSE: JPMPA) gained 13 cents, ending at $21.64. The series D preferreds (NYSE: JPMPD) put on 17 cents, closing at $21.63.

After the bell, the Wall Street Journal reported that the New York-based bank had reached a tentative deal with the Federal Housing Finance Agency regarding claims that JPMorgan had misled Fannie Mae and Freddie Mac about the quality of mortgages its had sold to the agencies.

Under the agreement, JPMorgan would have to shell out $4 billion, though that was less than the original $6 billion the FHFA sought.

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