JPMorgan Chase Selling Fixed Rate Preferred

Giant banker JPMorgan Chase (NYSE:JPM) will be selling a new fixed rate, non cumulative preferred issue.  Of course the dividends will be qualified for preferential tax treatment.

The issue will be investment grade rated.

Preliminary filings can be seen here.

Final pricing and the temporary ticker for OTC Grey market trading are not yet known, but will be posted when known.

We note that JPM has a 6.70% issue outstanding (JPM-B) which becomes redeemable on 3/1/2019 and may well be redeemed on 3/1 with the proceeds from this issue.

20 thoughts on “JPMorgan Chase Selling Fixed Rate Preferred”

  1. Have owned JPMb since is came out. This new offering probably want be as good. Going off BACb which just came out at 6% last year.

  2. I was reading this morning that JPM reported just 1% year over year growth in its commercial/industrial loan portfolio. This at the same time a ‘maturity wall’ of 1.6 trillion is facing business over the next 3 years. There’s no shortage of demand for commercial lending, so what clever game are these bankers playing?

  3. I just increased my overloaded position in MTB- buying at 1003 today. It goes exD of $15.93 in less than 2 weeks. This effectively puts purchase at a 6.45% for actually a higher rated issue (by Moodys) and cumulative with higher yield. This is my best value play safe issue on the board. It is past call so if one is wanting uncallable issues, this wouldnt be for you. But effectively this effectively buying under par at this price.

      1. That is correct Gabrile. Although combined they are ~ $400 million in preferreds they are illiquid. The reason being because they were were issued originally for institutional buyers who typically dont trade them. And the fact of course being $1000 par means only around 400,000 shares are outstanding between the two sisters; so they never have or never will be liquid.

            1. Sorry Grid, in addition to MTB- thought you also held the FTF MTBPP. Cannot find it listed. Another item can’t seem to dig up an answer- are FIISO distributions QDI?

              1. Ok, got ya! No, the 2 issues are MTB- and MTB-C… MTB- is also indentified in some brokerages as MTB-P…But there is no second P, just one. Though two separate preferreds in trading, MTB-, and MTB-C are identical in terms… 6.375% par, QDI, cumulative, perpetual and past first call date from last fall.
                Yes, FIISO is QDI.

                1. Thank you Grid. Started digging when seeing the FTF feature on the MTBPP issue. It’s not exchange-listed, so guess we needed to belong to their golf club to be eligible buyers.

                  1. Yes, Alpha, MTB had more private placed issues. And if truth be known my above two were not meant for retail consumption either. I assume MTB has no interest in such issuances. They are a very financially strong regional bank. In fact in the world of preferreds the overwhelming majority of preferred issuances are private placed, not publically traded.

  4. I used to own JPM-B years ago and will be interested in this depending on what the rate is.

    By the way, does anyone know where I can find more info on GLIBP?

    1. Jacob–GLIBP is a Gridbird issue–maybe he will chime in as he knows the history on this.

    2. Jacob, I dont know how well you dig through SEC filings so here are the basics…It also is a 21 year term dated issue as sited in another SEC filing.
      BTW, last data I could find has GCI Liberty corporate family debt rating at B2. As you know preferreds sit lower in the cap stack. So it is rated well into junk terrority.

      GCI Liberty Series A Cumulative Redeemable Preferred Stock (the “Preferred Stock”) was issued as a result of the auto conversion that occurred on March 8, 2018. The Company is required to redeem all outstanding shares of Preferred Stock out of funds legally available, at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date through the redemption date, on the first business day following the twenty-first anniversary of the March 8, 2018 auto conversion. There were 7,500,000 shares of Preferred Stock authorized and 7,248,327 shares issued and outstanding at September 30, 2018. An additional 42,500,000 shares of preferred stock of the Company are authorized and are undesignated as to series.
      The liquidation price is measured per share and shall mean the sum of (i) $25, plus (ii) an amount equal to all unpaid dividends (whether or not declared) accrued with respect to such share have been added to and then remain part of the liquidation price as of such date.

      The holders of shares of Preferred Stock are entitled to receive, when and as declared by the GCI Liberty Board of Directors, out of legally available funds, preferential dividends that accrue and cumulate as provided in the restated GCI Liberty certificate of incorporation.

      Dividends on each share of Preferred Stock accrued on a daily basis at an initial rate of 5.00% per annum of the liquidation price, and increased to 7.00% per annum of the liquidation price effective July 16, 2018 as a result of the Reincorporation Merger in the State of Delaware in May 2018.

      Accrued dividends are payable quarterly on each dividend payment date, which is January 15, April 15, July 15, and October 15 of each year, commencing on the first such date following the auto conversion, which occurred immediately after the market closed on March 8, 2018. If GCI Liberty fails to pay cash dividends on the Preferred Stock in full for any four consecutive or non-consecutive dividend periods then the dividend rate shall increase by 2.00% per annum of the liquidation price until cured. The Company paid a special cash dividend of approximately $0.13 per share of Preferred Stock on May 3, 2018 and a cash dividend of approximately $0.31 per share of Preferred Stock on July 16, 2018. On September 19, 2018, the Company declared a quarterly cash dividend of approximately $0.44 per share of Preferred Stock which was paid on October 15, 2018 to shareholders of record of the Preferred Stock at the close of business on October 1, 2018.

      1. Thanks Grid. I did not know Liberty’s credit rating was that deep into junk territory.

        GCI’s main competitor ALSK was able to refinance their debt yesterday at a better rate than what they had been paying (surprising in this environment).

        I’d am interested in GLIBP for a flip but perhaps closer to the ex div date.

  5. There’s also the A issue (which I hold) callable since 3/2018 but that coupon is only 5.45%.

    1. Yes jerseyvinny–there are a total of 7 issues outstanding–most not yet redeemable, but as you mention the ‘A’ issue is redeemable, but at that coupon it will be outstanding for a very long time I think. The ‘B’ at 6.70% is rip for redemption in a month as the price talk on the new issue is around 6.125%-6.25%.

      1. At that rate, it would be competitive. BAC-B at 6% issued last year is at $25.23. WFC-Q at 5.875%, floating at Libor+3.09% in 5 years is at $24.99

      2. When confronted with several issues from the same company, I lean toward taking the one with the lowest coupon. My reasoning is it will probably be offered at a discount to the higher coupon issues thus making the final yield pretty much equivalent. Also, the lower coupon is least likely to be called and, if it is, more likely to have a capital gain if purchased at a discount.

    2. Vinny, I also hold the JPM-A issue in my IRA. Just a steady income stream, though the stock price has suffered lately with the rate hikes.

      I am interested in the new JPM-C issue, and will likely try to get some hopefully below par, when it starts trading.

      One of my holdings, C-L, is being called in early Feb, so that money now has a destination.

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