Maiden Holdings' notes free to trade; JPMorgan preferreds little fazed by settlement news

By Stephanie N. Rotondo

Phoenix, Nov. 19 - Preferred stocks held in during Tuesday trading, according to sources.

"The market was pretty flat all day," one market source said. As for liquidity, it was "OK, not great."

A trader said Maiden Holdings North America Ltd.'s newly priced $152.5 million issue of 7.75% $25-par fixed-rate notes due 2043 had freed to trade early in the session.

He quoted the issue at $24.81 bid, $24.85 offered.

After the bell, a market source said the new issue dominated overall trading, with well over 1 million notes being exchanged.

He called the securities down 20 cents on the day at $24.80.

However, a trader remarked that he had not seen any markets in Fifth Third Bancorp's $750 million of 4.3% $1,000-par subordinated notes due 2024, a deal that also priced on Monday.

In the secondary, there was "no huge reaction" in JPMorgan Chase & Co.'s preferreds on news the bank had inked a $13 billion settlement with the Justice Department. Though the preferreds did finish the day mostly down, the movement was modest at best.

JPMorgan in deal with Justice

JPMorgan's preferreds did not react much to news the New York-based bank had inked a $13 billion settlement with the Justice Department, resolving several state and federal lawsuits that alleged the bank knowingly misled investors in regards to mortgage-backed securities it sold.

"It wasn't a huge surprise," a source said of the deal, given that various bits and pieces had been leaked to the media throughout the negotiation process.

The 5.5% series O noncumulative preferreds (NYSE: JPMPD) followed the trend of the day, ending flat at $21.00. The 5.45% series P noncumulative preferred stock (NYSE: JPMPA) was the "big mover on the down side," a source said, as the paper fell 8 cents to $20.84.

The 6.7% series CC capital securities (NYSE: JPMPC) meantime dipped 2 cents to $25.61.

The common stock (NYSE: JPM) closed up 41 cents at $56.15. A source opined that the rise in the equity could have been due to investors' relief that a deal was done and all civil charges at least were behind them.

Aside from having to pay $13 billion to the government, JPMorgan also had to make several concessions, including acknowledging a statement of facts that showed how the bank did in fact mislead investors when it sold them toxic bundles of mortgage-backed securities. The bank also failed to get Justice to agree to drop all related criminal investigations, leaving the bank open for criminal charges.

But one market source said that while a criminal case "would be disastrous," he noted that it would be a very difficult case to prove. Therefore, he doubted it would even get that far.

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