Preferreds rise as JPMorgan earnings beat, BofA announces redemption; Public Storage frees to trade

By Stephanie N. Rotondo

Seattle, July 14 – The preferred stock market was heading higher again on Thursday, helped in part by fresh news out of the big banks.

The Wells Fargo Hybrid and Preferred Securities Index finished 11 basis points better. It was up 13 bps at mid-morning.

JPMorgan Chase & Co. kicked off bank earnings, posting better-than-expected results, particularly in terms of trading activity. Bank of America Corp. meantime said late Wednesday that it was redeeming $1.97 billion of trust preferred securities.

JPMorgan’s quarterly results have the market optimistic that the recent Brexit vote won’t have as much downside as previously thought. As for BofA’s redemption, the announcement was not a huge surprise, given that a slew of redemptions were expected in the wake of the CCAR results, which came out in late June.

A trader remarked that “as people focus on these banks and their earnings, we could see some new deals come.”

Despite the news, there was limited volume in either JPMorgan or BofA preferreds.

JPMorgan’s 6.3% series W noncumulative preferreds (NYSE: JPMPE) – the most active of the bank’s preferred issues – were also weaker on the day, falling 19 cents, or 1.06%, to $27.13.

BofA’s 6% series EE noncumulative preferreds (NYSE: BACPA) were meantime trending up, rising 2 cents to $26.20.

One of the most actively traded issues of the day were Countrywide Financial Corp.’s 6.75% capital securities (NYSE: CFCPA), one of the three issues that BofA is redeeming. The paper fell 73 cents, or 2.82%, to $25.17, on over 1 million preferreds traded.

The closing price is closer to the redemption price of par plus 20.625 cents.

New deals do well

As for deals priced this week, Public Storage’s $300 million of 4.95% series D cumulative preferreds were pegged in a $24.90 to $24.94 range early Thursday. The preferreds ended at the high end of that range, which was up from opening levels of $24.83.

Nearly 1.79 million of the preferreds changed hands, making it the most active security of the day.

The deal freed to trade at 11 a.m. ET, a trader reported. It also began trading under a temporary symbol, “PBSDP.”

Pricing took place on Wednesday via BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

As for Dominion Resources Inc.’s $800 million of 2016 series A $25-par junior enhanced subordinated notes due 2076 – a deal priced Tuesday – it was seen at $25.07 bid, $25.12 offered.

A market source said the notes closed at $25.07.

That issue was upsized from $250 million, with initial price talk at 5.375% to 5.5%. BofA, Morgan Stanley, UBS and Wells Fargo also ran those books.

And, Stifel Financial Corp.’s $150 million of 6.25% series A noncumulative perpetual preferreds – a deal priced Monday – came in a touch, slipping a nickel to $25.90.

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