Morning Commentary: Hancock Holding offering $25-par notes; 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.

Price talk is in the 6.125% area, a trader said, seeing the paper at $24.85 bid in the early gray market.

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

Morgan Stanley & Co. LLC is running the books.

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 were trading at $25.40 at mid-morning, down 4 cents from Friday’s close.

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.

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