Preferreds see firm tone; JPMorgan rises as bank avoids criminal charges in Madoff scandal

By Stephanie N. Rotondo

Phoenix, Jan. 6 - Preferred stocks were strong as the first full post-holiday week began.

The Wells Fargo Hybrid and Preferred Securities index was up 32 basis points as of mid-morning. By the time the day was done, the index was up 44 bps.

"People are still looking at how cheap our stuff is," a trader said. "Everything is ticking up because our stuff is cheaper compared to corporates."

There had yet to be any word of new deals, though it is expected that once the pipeline begins to flow, it should be rather steady.

In the secondary, overall volume was moderate, especially for a post-holiday Monday.

JPMorgan Chase & Co. was in the news as news outlets reported that the New York-based bank planned to make a $2 billion settlement payment for its role in the Bernie Madoff ponzi scheme scandal. In inking the settlement, the company will avoid criminal prosecution.

The federal government had been investigating JPMorgan's role in the scheme, and it was alleged that the bank ignored suspicious activity emanating from Madoff's fund.

Despite the hefty settlement - that brings the bank's total settlement payouts in the last year to about $20 billion - the preferreds were on the rise.

The 5.45% series P noncumulative preferreds (NYSE: JPMPA) earned 28 cents, or 1.34%, ending at $21.18. The 5.5% series O noncumulative preferreds (NYSE: JPMPD) gained 34 cents, or 1.61%, to close at $21.40.

Away from JPMorgan, Ally Financial Inc. was on the busier side, though there was no fresh news to act as a catalyst.

The 8.125% series 2 fixed-to-floating rate trust preferred securities (NYSE: ALLYPA) ended up a cent at $26.80, while the 8.5% series A fixed-to-floating rate perpetual preferreds (NYSE: ALLYPB) finished 2 cents higher at $27.01.

Also in the financial realm, Wells Fargo & Co.'s 6.625% series R fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPR) improved by 11 cents to $25.81 and General Electric Capital Corp.'s 4.7% $25-par notes due 2053 gained 20 cents, or 1%, to $20.16.

Away from financials, Duke Realty Corp.'s 6.6% series L cumulative preferreds (NYSE: DREPL) were quite active, with nearly 1 million shares being exchanged. The issue ended the session up 18 cents at $23.08.

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