Morning Commentary: Goldman launches offering; preferreds soften; Teekay 8.5% preferreds up

By Cristal Cody

Tupelo, Miss., Oct. 18 – Goldman Sachs Group, Inc. announced early Wednesday it is launching an offering of depositary shares, which each represent a 1/25th interest in its series P fixed-to-floating rate non-cumulative preferred stock.

On Friday, JPMorgan Chase & Co. priced $1,257,500,000 of perpetual fixed-to-floating rate depositary shares (Baa3/BBB-/BBB-) at par with an initial fixed rate of 4.625%.

The depositary shares each represent 1/10 of an interest in a share of JPMorgan Chase’s series CC fixed-to-floating rate non-cumulative preferred stock.

Initial price thoughts on the deal were in the 4.75% area. The dividend rate will convert to a floating rate of Libor plus 258 basis points on Nov. 1, 2022.

Preferred shares overall were weaker at the start of the day.

The Wells Fargo Hybrid and Preferred Securities index dropped 19 basis points over the morning.

The U.S. iShares Preferred Stock ETF was down 9 bps.

Teekay LNG Partners LP’s new $150 million of 8.5% series B fixed-to-floating-rate cumulative redeemable perpetual preferred units that freed to trade on Tuesday were 8 cents better early Wednesday at $25.05.

The preferreds were issued the temporary symbol “TKYYF” and closed on Tuesday unchanged at $24.97.

The distribution rate on the preferreds will convert to a floating rate equal to Libor plus a spread of 624.1 bps per year per $25.00 of liquidation preference per unit from Oct. 15, 2027.

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