JPMorgan brings upsized deal at tight end of revised talk; oil rises, lifting energy issues

By Stephanie N. Rotondo

Phoenix, Feb. 5 – The primary preferred stock market saw another deal price on Thursday as JPMorgan Chase & Co. brought $1.2 billion of 6.125% series Y noncumulative perpetual preferreds.

The deal was upsized from $400 million. Price talk was initially 6.25% to 6.375% but was then revised to 6.125% to 6.25%, a trader said.

Shortly before the deal priced, the trader quoted the issue at $24.83 bid, $24.85 offered. At mid-morning, he saw an early gray market quote of $24.70 bid, $24.77 offered, adding that the paper had been around $24.80 prior to the price talk revision.

“They usually trade pretty strong,” he said of the bank’s preferreds.

In the existing JPMorgan issues, the 5.5% series O noncumulative preferreds (NYSE: JPMPD) and 6.3% series W noncumulative preferreds (NYSE: JPMPE) traded softer on the heels of the new deal.

The series O preferreds were down 29 cents, or 1.19%, at $24.13. The series W preferreds were off 11 cents at $25.61.

J.P. Morgan Securities LLC is running the books on the new deal.

The secondary space meantime weakened for the second consecutive session, even as the broader markets fared better amid another round of gains in oil prices.

The Wells Fargo Hybrid and Preferred Securities index closed 9 basis points weaker.

Oil rises again

With oil prices once again reversing course – this time heading into higher territory – the energy sector had a firmer tone to it.

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) rose 37 cents, or 1.7%, to $22.11.

Goodrich Petroleum Corp.’s 10% series C cumulative preferreds (NYSE: GDPPC) meantime gained 45 cents, or 5.48%, to close at $8.66. The 9.75% series D cumulative preferreds (NYSE: GDPPD) improved 15 cents, or 1.81%, to $8.43.

Vanguard Natural Resources LLC’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP) were 20 cents better on the day, closing at $21.70.

West Texas Intermediate crude oil ended nearly 5% higher on the day at $50.79, a gain of $2.34. Brent crude was similarly higher, rising $2.63 to $56.79.

The gains came on the heels of an attack at an oil refinery in Libya, sparking speculation that production might be curtailed.

However, it was later reported that production at the plant was not impacted.

The upward momentum was also attributed to chatter that oil demand in China might grow as the country’s central bank cut interest rates.

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