JPMorgan said to offer $1,000-par fixed-to-floating preferreds; United Financial prices

By Stephanie N. Rotondo

Phoenix, Sept. 18 – The preferred stock market continued to gain ground in Thursday trading as investors reacted positively to the Federal Reserve’s statement on Wednesday.

The central bank said after its monthly meeting that it would only raise interest rates if data supports doing so and that it did not intend to tie its actions to a specific calendar date.

The Wells Fargo Hybrid and Preferred Securities index finished up 24 basis points.

A trader said that JPMorgan Chase & Co. had launched a benchmark $1,000-par offering of fixed-to-floating rate perpetual preferreds on Thursday, though a prospectus had not yet been filed.

The trader said the structure would be “pretty standard,” with a 10-year non-call feature. The interest rate will be fixed for 10 years as well, and then it will float at Libor plus a spread.

He said price talk was around 6.125%.

“It should price later today,” he said, seeing a 101½ gray market offer.

Meanwhile, the Gabelli Healthcare & WellnessRx Trust’s new $35 million of 5.875% series B cumulative perpetual preferreds – a deal that priced Wednesday – was seen at $24.60 bid early in the day.

“It’s likely a manager, trying to clean it up,” a trader said. “It’ll slosh around for awhile, but it should move up.”

Also from this week’s business, American Financial Group Inc.’s $150 million of 6.25% $25-par subordinated notes due 2054 were quoted at $24.70 bid, $24.75 offered.

That deal came Tuesday and freed up on Wednesday.

Looking forward, a trader said the primary space “should have a decent calendar for next week.

“That’s what we’ve been hearing,” he said. He noted that Goldman Sachs & Co. could be one to bring a deal, possibly a $1,000-par issue similarly structured to JPMorgan’s planned offering.

United prices, BNC on tap

United Financial Bancorp Inc. priced a $75 million offering of 5.75% $1,000-par subordinated notes due 2024 on Thursday.

The deal came via Sandler O’Neill + Partners LP, which is also running the books for an offering of fixed-to-floating rate subordinated notes due 2024 for BNC Bancorp.

The United deal is non-callable for life, except under certain circumstances.

As for the BNC deal, the issue is fixed until 2019, at which point it begins floating at Libor plus a spread.

The notes become redeemable in 2019 at par plus accrued interest. Additionally, the company can redeem the securities in whole upon a tax or regulatory capital treatment event, or if the company is required to register as an investment company.

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