Preferreds rebound from lows; Associated Banc deal frees; JPMorgan wanes; MetLife active

By Stephanie N. Rotondo

Phoenix, June 2 – The preferred stock market was weak in Tuesday trading but managed to come up from the day’s lows.

“With the long bond off two days in a row, we’ve got a little selling pressure,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index closed down 13 basis points. The index was down 20 bps at mid-morning.

The negative performance of the marketplace came as the Commerce Department said new orders for U.S. factory goods fell in April, suggesting that a strong dollar was weighing on production.

With the softer tone of the market, even recently priced deals were not gaining any traction.

Associated Banc-Corp’s $65 million of 6.125% series C noncumulative perpetual preferreds – a deal priced Monday – were seen at $24.60 in early trading.

A trader said the issue had already freed from the syndicate.

UBS Securities LLC and Citigroup Global Markets Inc. were the joint bookrunners.

As for the Green bay, Wis.-based bank’s older 8% series B perpetual preferreds (NYSE: ASBPB), those remained under pressure, falling 23 cents to $26.49.

The issue had ended the previous session off 23 cents as well.

Meanwhile, JPMorgan Chase & Co.’s $1.3 billion of 6.1% series AA noncumulative preferreds – a deal from Thursday – were pegged at $24.72, down about a nickel from Monday’s close.

“I heard that institutionally, there were not as many people involved as they would have liked,” a trader remarked of the offering.

Another market source saw the preferreds ending at $24.73.

J.P. Morgan Securities LLC ran the books on that deal.

As investors jockey for pieces of that pie, the JPMorgan preferred stock structure has been weaker – a trend that continued into Tuesday’s session.

However, the most active of the New York-based bank’s preferreds – the 6.125% series Y noncumulative preferreds (NYSE: JPMPF) – finished the day up 6 cents at $25.15.

Away from new issues, MetLife Inc.’s 6.5% series B noncumulative preferreds (NYSE: METPB) dominated trading, with more than 1 million shares being exchanged during the trading day.

The preferreds closed 6 cents lower at $25.03.

Late Monday, the New York-based insurance company officially launched a tender for the preferreds. The tender expires June 26, and holders will receive par plus accrued and unpaid dividends for the shares.

However, should some investors choose not to participate in the tender, their holdings will be called on July 1 – but there’s a catch.

In the event that a preferred stockholder does not tender his shares and instead waits for the call, he will only receive $25.00 per share.

The redemption of the series B preferreds was not news in and of itself. MetLife said Wednesday that it planned to call the paper when it priced $1.5 billion of 5.25% $1,000-par series C fixed-to-floating rate noncumulative preferreds.

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