Hancock’s $25-par notes issue upsized to $150 million; JPMorgan calls capital securities

By Stephanie N. Rotondo

Phoenix, March 2 – The new week kicked off with a new deal in the preferred stock market on Monday.

Hancock Holding Co., the holding company of Whitney Bank, said it was selling at least $100 million of $25-par subordinated debt securities due 2045.

The issue priced as an upsized $150 million deal at par to yield 5.95%.

Price talk was initially in the 6.125% area, a trader said, seeing the paper at $24.85 bid in the early gray market. But talk was later revised to 6%, and the issue was seen at $24.90 in the gray.

“They are kind of a new issuer in our area,” the trader noted.

Morgan Stanley & Co. LLC is the bookrunner.

Meanwhile, JPMorgan Chase & Co. announced late Friday that it was redeeming all of its outstanding $1.5 billion of 6.7% series CC capital securities (NYSE: JPMPC).

The redemption will take place April 2 at a price of par plus accrued dividends. The call will be funded with available cash.

The securities closed off 6 cents at $25.39.

Among the bank’s other issues, the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) rose 2 cents to $25.14. The issue dominated trading, with about 1.5 million shares being exchanged.

Once the call occurs, a trader noted that there are sure to be “pretty big holes” among several preferred stock ETFs, including the iShares U.S. Preferred Stock ETF (NYSE: PFF), which holds about $116 million of the shares, the trader said. As such, it could present issuers with a “good time to issue.”

Additionally, as Citigroup Inc.’s 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN) become callable in October, the trader expects that issue will be replaced as well, creating yet another large space for ETFs to fill.

“That has such a huge floating rate component,” he said.

The floating rate on the issue is Libor plus 637 basis points.

But given the current rate environment, ETFs are not going to be able to fill said spaces with anything as yield-y as the current holdings, the trader said. Still, it will likely cause “a lot of demand” in the primary space.

Goodrich on the rise

Goodrich Petroleum Corp. continued to gain ground Monday following the company’s earnings release on Friday.

On Monday, the company announced an offering of 12 million common shares, the proceeds of which would be used to reduce borrowings under its credit facility.

In the company’s preferreds, the 10% series C cumulative preferreds (NYSE: GDPPC) rose 34 cents, or 3.66%, to $9.64. The 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 14 cents, or 1.53%, to $9.28.

One trader placed the 8 7/8% notes due 2019 – which become callable March 15 – in a 50 to 51 context. Another market source pegged the paper around 50¼, up from the mid-40s on Friday.

But the common stock (NYSE: GDP) did not fare as well as the new stock offering got underway.

The shares declined 52 cents, or 11.61%, to $3.96.

For the quarter, the Houston-based oil and gas company posted a loss of $225.8 million, or $5.23 per share. On an adjusted basis, the loss was 47 cents per share.

Analysts polled by Zacks Investment Research had forecast a loss of 46 cents per share.

Revenue was $48.6 million for the quarter. That also came in below of expectations of $57 million.

For the full year, net loss increased to $353.1 million, or $8.62 per share. Revenue was $208.6 million.

In addition to announcing its earnings, Goodrich also said that it was planning a $100 million offering of 8% senior secured notes due 2018. The sale will include warrants to purchase up to 4.88 million common shares at an exercise price of $4.66, a 10% premium over Thursday’s closing price.

The company has the option to sell anther $75 million of the notes in the future.

The new issue was not the last of the news the company had to offer. Goodrich said that it had amended its first-lien credit facility in order to extend the maturity to February 2017. The borrowing base was also reset to $200 million and will be reduced to $150 million upon closing of the sale of the second-lien notes.

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