JPMorgan prices upsized offering of noncumulatives; SoCal Edison calling $100-par issues

By Stephanie N. Rotondo

Phoenix, Jan. 29 - Preferred stocks spent most of the day trading flat, a market source said Tuesday. But in the last few minutes of trading, the market turned downward, ending off by about 3 cents on average, he said.

Liquidity was "a little improved," he added.

Several new issues were announced in the preferred market on Tuesday, including a $500 million offering of noncumulative perpetual preferreds from J.P. Morgan Chase & Co. The deal priced shortly before the close, coming upsized at $850 million.

Price talk was originally around 5.5% but was revised to 5.45%.

Meanwhile, two real estate investment trusts - Arbor Realty Trust Inc. and Saul Centers Inc. - announced offerings of cumulative redeemable preferred stock. However, there were few markets to be seen as of midafternoon, according to a trader.

"I didn't see too much; there was a lot of other stuff going on," another source said, pointing specifically to the JPMorgan new issue and an upcoming preferred auction from Zions Bancorporation.

The Arbor Realty deal came after the close, with the company selling $35 million of series A cumulative redeemable preferreds at par to yield 8.25%.

The Saul Centers issue had not priced as of press time.

After the bell, Southern California Edison Co. announced the redemption of its $100-par series B and C preference shares. The issues were not much changed, given that the news had come after the close. However, the recently priced 5.1% trust preference shares were among the day's most actively traded securities.

JPMorgan brings new issue

J.P. Morgan Chase brought $850 million of 5.45% series P noncumulative perpetual preferreds on Tuesday.

The deal was upsized from $500 million. Pricing was in line with revised talk.

Ahead of pricing, a trader saw the issue at less 25 cents in the midday gray market.

Another market source quoted the issue at $24.70 bid, $24.75 offered post-pricing.

The deal was self-led, with Bank of America Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC acting as joint leads.

SoCal to call $100-pars

Southern California Edison announced that it would call all of its 6.125% $100-par series B preference shares and its 6% $100-par series C preference shares on Feb. 28.

The shares were not much changed by the news, given that it came out after the market had closed.

The Bs (OTCBB: SCEDO) closed unchanged at $101, while the Cs (OTCBB: SCEDL) dipped 2 cents to $100.25 in above average trading.

The company said the redemption would be funded with proceeds from its recently priced 5.1% trust preference shares linked to SCE Trust II.

That issue was among the day's most actively traded, ending unchanged at $24.57.

Sunstone active on redemption

In other redemption news, Sunstone Hotel Investors Inc.'s 8% series A cumulative redeemable preferreds will be called on March 1, according to a press release issued late Monday.

The call price includes 33 cents of accumulated dividends, bringing the total to $25.33 per share.

In Tuesday trading, the 8% preferreds (NYSE: SHOPA) made the day's most active list, rising 3 cents to $25.27.

The redemption will be funded with proceeds of a common stock offering that was announced Tuesday.

Some deals fizzle

In recent deals, FirstMerit Corp. and First Horizon National Corp.'s latest issues were not performing all that well.

A trader said First Horizon's $100 million issue of 6.2% series A noncumulative perpetual preferreds - a deal that priced Thursday - "has been a dog."

He placed the shares at $24.35 bid, $24.40 offered.

FirstMerit's $200 million of 5.875% series A noncumulative perpetual preferreds - a deal that came Monday - was meantime "hovering" around $24.50.

"Both of those little deals are not doing so good," the trader said. "But that's to be expected, they're both tiny deals and they squeezed the coupon on them."

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