Primary market takes a breather; JPMorgan's issue frees up; Zions' preferred auction eyed

By Stephanie N. Rotondo

Phoenix, Jan. 30 - The primary preferred stock market was taking a bit of a break at midweek, as no new issues had been announced as of midday.

"Maybe we're done for the week," a trader said. "But maybe not."

He added that he had not heard any rumors of potential deals coming for the rest of the week or the next week.

By the end of the day, the preferred market had ticked up a touch, according to a market source. Wednesday was the first firm day the market had seen all week.

J.P. Morgan Chase & Co.'s new $850 million issue of 5.45% series P noncumulative perpetual preferreds freed from the syndicate in early trading. The deal priced on Tuesday, coming upsized from $500 million.

A market source remarked that the primary arena was particularly focused on an auction of Zions Bancorporation preferreds. The auction began on Wednesday and is slated to end on Thursday at 3 p.m. ET.

Additionally, one of Zions' existing issues was on the active side, as company management indicated it was looking to call the securities.

Of other secondary issues, Sunstone Hotel Investors Inc.'s 8% series A cumulative redeemable preferreds remained busy - though unchanged - as investors geared up for an upcoming redemption.

JPMorgan frees

JPMorgan's newly priced 5.45% series P noncumulative perpetual preferred freed to trade on Wednesday, after pricing on Tuesday.

A trader saw the issue at $24.70 bid at midafternoon.

"It's probably a manager, but I'm not positive," he said.

After the close, a source placed the issue at $24.75.

Of the New York-based bank's other issues, the 5.5% series O noncumulative perpetual preferreds (NYSE: JPMPD) made the day's most actively traded list, rising 8 cents to $24.98. Over 465,000 shares changed hands.

Zions auction getting focus

A market source said the primary space was focusing intently on Zions Bancorporation's auction of $200 million series G fixed-to-floating rate noncumulative perpetual preferreds.

The auction began early Wednesday and will continue until Thursday at 3 p.m. ET.

The source said pricing is expected to be in the 5.3% to 6.3% range.

"I think they will do OK," he said. 'It'll probably come somewhere in the low-sixes.

"It's not the best credit, but it's been improving."

He noted that it was difficult to say how the auction was faring thus far, given that bidders all have various strategies when it comes to bidding.

Meanwhile, Zions' 9.5% series C noncumulative perpetual preferreds (NYSE: ZBPC) were on the active side, which a source attributed to the company's earnings call.

According to the source, management indicated an interest in redeeming the higher-coupon preferreds.

The shares rose 8 cents on Wednesday, closing at $26.20.

Zions is a Salt Lake City-based bank holding company.

Sunstone still busy

Sunstone Hotel Investors' 8% series A cumulative redeemable preferreds (NYSE: SHOPA) were active again on Wednesday but ended unchanged at $25.27.

The Aliso Viejo, Calif.-based real estate investment trust announced late Monday that the securities will be called on March 1.

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

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

Recent deal tidbits

Arbor Realty Trust Inc.'s $35 million of 8.25% series A cumulative redeemable preferreds - another deal that priced Tuesday - was quoted at $24.70 bid, $24.85 offered.

However, a trader remarked that he had not seen any markets for Saul Centers Inc.'s $125 million of 6.875% series C cumulative redeemable preferreds. That issue came late Tuesday.

In other recent deals, FirstMerit Corp.'s $200 million of 5.875% series A noncumulative perpetual preferreds was set to free up at 12:30 p.m. ET.

The paper - which priced Monday - was "hanging around" $24.60, according to a trader.

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