Preferreds respond ‘pretty well’ to Fed minutes; JPMorgan gyrates; National General prices

By Stephanie N. Rotondo

Phoenix, June 18 – Preferred stocks firmed up in midweek trading.

A market source said the “market responded pretty well to the [Federal Reserve’s] minutes,” in which the central bank said it had trimmed its bond repurchase program to $35 billion from $45 billion the month before.

The Fed cited an improving economy as the basis for its decision on the stimulus trimming.

The Wells Fargo Hybrid and Preferred Securities index was up 19 basis points at the bell. At mid-morning, it had been up 7 bps.

But while the market was up on the day, the source noted that it was “a quiet day in front of the Fed [announcement]. Not a lot of people wanted to transact.

Though the market had a firm tone, JPMorgan Chase & Co.’s $850 million of 6.3% series W noncumulative perpetual preferreds continued to languish below par.

A trader quoted the issue at $24.63 bid, $24.70 offered.

Another source said the issue was gyrating throughout the day. “First it traded down; then it traded up,” he said.

He said the preferreds closed at $24.73, which was up 3 cents from the previous trading day. However, he said the volume weighted average price of $24.697 was probably a more accurate level.

“It was probably more flat on the day,” he said.

The deal priced Monday and freed up Tuesday afternoon. The new issue came upsized from $400 million and tightened from original talk of 6.375% to 6.5%.

As for the Federal Agricultural Mortgage Corp.’s $75 million issue of 6% fixed-to-floating rate noncumulative preferreds, those were pegged at $24.80 bid at mid-morning.

The Farmer Mac preferreds priced Tuesday. The dividend begins floating July 18, 2024 at Libor plus 326 bps.

National General prices

National General Holdings Corp. sold $55 million of 7.5% series A noncumulative perpetual preferreds.

Earlier in the session, a trader said he expected the deal – which was originally expected to be closer to $100 million – to price Wednesday.

The new issue came at the tight end of talk.

At mid-morning, a trader said he had yet to see any gray markets for the preferreds. After pricing, he said he still hadn’t seen any quotes for the paper.

Morgan Stanley & Co. LLC and UBS Securities LLC are the bookrunners.

Proceeds will be used for general corporate purposes, which includes future acquisitions and to support the company’s current and future policy writings.

National General is a New York-based specialty personal lines insurance holding company.

Capital One busy, better

Capital One Financial Corp.’s preferreds dominated trading among paying securities on Wednesday, according to a market source.

However, there was no real news to drive the activity in that name.

The 6.25% series C fixed-rate noncumulative perpetual preferreds (NYSE: COFPC) – a $500 million deal that priced June 9 and listed on the New York Stock Exchange on Monday – closed up 13 cents at $24.51.

The 6% series B noncumulative perpetual preferreds (NYSE: COFPP) were also busy, putting on 3 cents to close at $23.92.

Capital One is a McLean, Va.-based financial services company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.