Preferreds inch higher as Greece, creditors reach deal; DynaGas prices; bank earnings eyed

By Stephanie N. Rotondo

Phoenix, July 13 – Preferred stocks were trending higher on Monday as the market hoped a Greek debt deal would get done.

The Wells Fargo Hybrid and Preferred Securities index ended 12 basis points better. The index was up 4 bps at mid-morning.

Greece and its E.U. creditors reportedly hashed out a deal late Sunday. Details of what that deal entails have been fuzzy, but it has been reported that this bailout – the third the country has wrangled – includes the harshest terms yet.

The rescue package still needs to be passed by Greek parliament.

The news did seem to appease investors, however, and the preferred stock market kicked off the week with a new issue hitting the tape.

DynaGas LNG Partners LP announced and priced a $75 million sale of 9% series A cumulative redeemable preferred units on Monday.

Morgan Stanley & Co. LLC is the lead on the deal.

“I like that Morgan Stanley is comfortable bringing a new deal, so that’s good,” a trader said, seeing a $24.55 bid, $24.70 offered gray market quote for the units early in the day.

Later in the afternoon, a market source pegged the issue at $24.53 bid, $24.60 offered.

“Ouch for someone,” he quipped.

Other joint bookrunners include Credit Suisse Securities (USA) Inc., Stifel Nicolaus & Co. and DNB Markets.

Price talk was 9% to 9.125% on the non-rated deal, which came upsized from $50 million.

Proceeds will be used with borrowings under a new secured debt facility to finance the purchase price of an optional vessel acquisition. Should that acquisition fail, the funds will be used for general partnership purposes, including working capital.

DynaGas is a Monaco-based growth-oriented limited partnership focused on owning and operating LNG carriers.

JPMorgan, Wells numbers eyed

Looking to the week ahead, bank earnings will be in focus and JPMorgan Chase & Co. and Wells Fargo & Co. kick things off on Tuesday.

Ahead of those results, both banks saw their preferreds ending with a mostly firm tone.

JPMorgan’s 6.1% series AA noncumulative preferreds (NYSE: JPMPG) – an issue that will be added to the S&P U.S. Preferred Stock Index on Friday – rose 3 cents to $24.99. The shares dominated trading, with over 808,000 shares being exchanged.

However, the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) slipped slightly, losing a penny to close at $25.17.

In Wells Fargo’s preferreds, the 5.85% series Q fixed-to-floating rate noncumulative preferreds (NYSE: WFCPQ) edged up a penny to $25.47, while the 8% class A series J noncumulative preferreds (NYSE: WFCPJ) put on a nickel, finishing at $28.20.

JPMorgan is expected to see earnings per share of $1.44 in the second quarter on revenue of $24.44 billion, according to FactSet. Should the New York-based bank meet those expectations, the results would be lower than the $1.46 earnings per share on revenue of $24.45 billion reported last year.

For Wells Fargo, earnings per share are expected to come in at $1.03, which would be a gain over the previous year’s $1.01 per share. Revenue is also expected to increase to $21.71 billion from $21.06 billion, FactSet reported.

After JPMorgan and Wells Fargo, Bank of America Corp. will release its quarterly results on Wednesday. Citigroup Inc. and Goldman Sachs Group Inc. will follow on Thursday.

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