American Express sells $1,000-par issue at 4.9%; JPMorgan rises above par; Breitburn firms

By Stephanie N. Rotondo

Phoenix, Feb. 25 – It was another firm day for the preferred stock market on Wednesday, though the space settled in a little from its highs.

The Wells Fargo Hybrid and Preferred Securities index ended up 8 basis points. The index was up 13 bps at mid-morning.

The day also brought a new issue from American Express Co., as the New York-based company sold $850 million of 4.9% $1,000-par series C fixed-to-floating rate noncumulative preferreds.

Initial price talk was 5.25%. The dividend begins floating March 15, 2020 at Libor plus 328.5 bps.

“It should clean up pretty well,” a trader said ahead of pricing.

Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets and Wells Fargo Securities LLC are running the books.

The new deal announcement came as the company said it was raising interest rates on more than 1 million of its cardholders. On average, cardholders will see an increase of 2.5%, raising the rates to at least 12.99%.

AmEx said that the increase was due to a review it did of its rates compared to its rivals on cardholders having “similar credit profiles,” in which it found its own rates were below competitors.

Additionally, the company also has reportedly lost its 16-year partnership with Costco, after having recently lost its contract with JetBlue.

Merchants have been nixing the card, as it costs more to take than other cards, like Visa or MasterCard.

Meanwhile, JPMorgan Chase & Co.’s $1.38 billion of 6.125% series Y noncumulative preferreds (NYSE: JPMPF) were “finally trading above par,” a trader said.

He saw the issue trading at $25.05 early in the session.

The paper closed at $25.07, up 8 cents day over day.

The deal priced Feb. 5.

Breitburn pops

Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) jumped 45 cents, or 1.96%, to $23.45 on Wednesday, as oil prices jumped on rising demand expectations.

West Texas Intermediate crude gained $1.67, or 3.39%, to $50.95 per barrel, while Brent crude improved $3.08, or 5.25%, to $61.74.

Additionally, the Los Angeles-based oil and gas company announced a monthly distribution for April 15.

Holders of the units will receive 17.1875 cents per unit.

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