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JPMorgan Chase: 6.00% From This Preferred Stock IPO


  • Overview of JPMorgan Chase's new preferred stock - JPM-C.
  • A brief look at the company.
  • Where in the context of all securities, issued by JPMorgan Chase, does JPM-C stands?
  • Comparison with the sector.
  • Comparison with the all preferred stocks, issued by a bank.
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In this article, we want to shed light on a new preferred stock issued by JPMorgan Chase & Co. (NYSE:JPM). An interesting fact is that the company use this symbol, as it was the ticker symbol of an old issue that was redeemed on April 2, 2015.

Source: QuantumOnline.com

The New Issue

Before we submerge into our brief analysis, here is a link to the 424B2 Filing by JPMorgan Chase & Co - the prospectus.

Source: SEC.gov

For a total of 74M shares issued, the total gross proceeds to the company are $1.9B. You can find some relevant information about the new preferred stock in the table below:

Source: Author's spreadsheet

JPMorgan Chase & Co. 6.00% Non-Cumulative Preferred Stock, Series EE (NYSE: JPM-C) pays a qualified fixed dividend at a rate of 6.00% and have a par value of $25. The new preferred stock is expected to be rated a 'BBB-' from Standard & Poor's and is callable as of 03/21/2024. Currently, the new issue trades above its par value at a price of $25.62 and has a 5.85% Current Yield and a 5.45% Yield-to-Call.

Here is how the stock's YTC curve looks like right now:

Source: Author's spreadsheet

The Company

JPMorgan Chase & Co. (JPMorgan Chase), incorporated on October 28, 1968, is a financial holding company. The Company is engaged in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. JPMorgan Chase's activities are organized into four business segments, as well as a Corporate segment. The Company's segments include Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Its principal bank subsidiaries include JPMorgan Chase Bank, National Association (JPMorgan Chase Bank, N.A.), a national banking association, and Chase Bank USA, National Association (Chase Bank USA, N.A.), a national banking association that is the Company's credit card-issuing bank. JPMorgan Chase's principal nonbank subsidiary is J.P. Morgan Securities LLC (JPMorgan Securities), the United States investment banking firm. The bank and nonbank subsidiaries of

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This article was written by

Arbitrage Trader profile picture

Arbitrage Trader, aka Denislav Iliev has been day trading for 15+ years and leads a team of 40 analysts. They identify mispriced investments in fixed-income and closed-end funds based on simple-to-understand financial logic.

Denislav leads the investing group Trade With Beta, features of the service include: frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of 1200+ equities, IPO previews, hedging strategies, an actively managed portfolio, and chat for discussion. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (29)

jamesrattenborg profile picture
When a preferred stock is called does it sell at par vale or a value determined by the bank? If the fed lowers rates to zero to prop up the stocks, do the banks call all preferreds?
Gridbird profile picture
@jamesrattenborg, if company redeems preferred it will pay at par price (generally $25 for most issues) plus accrued interest. Most will redeem at payment date of divi. Generally, most preferreds will be redeemed if they can reissue at 50-75 basis points lower than current preferred. There are transaction costs in issuing and redeeming preferreds so that is why it takes 50-75 basis points. When you start seeing new issues of similiar quality coming to market at that amount lower its time to get nervous if preferred is past redemption date. Though others can be redeemed for other reasons and not reissued though.
I try to sell them a bit early James and lock in any profits available.
And just find a new IPO or some other preferred to move the money into.

There is a downside to getting called. Usually your money remains locked up for up to a month while the call get resolved.
You don't get your money for the shares the day the call happens.
If you look at JPM-B which was called earlier this year.
When the call happens it gets renamed to JPM-B.cl in your account and will sit in your account like that for a while until the final call transaction happens.
And you cannot trade the JPM-B.cl shares since they are called and locked.
jamesrattenborg profile picture
Thank you user 1969.
I prefer (greatly) the PSA preferreds. The storage REIT PSA has almost no bank debt (and very low overall debt), and the company has stated that it would still break even at only a 30% occupancy rate (occupancy is in the 90 %s). Most of the PSA preferreds are still trading well below the $25 par value (they've risen somewhat from the incredible bargains they were at the end of 2018). Yield might be a little lower than the JPM preferreds but you get greater safety and that discount.
Doggy--Although its been awhile since I've looked at PSA, but probably they remain the strongest income credit in the reit space with almost no debt. I'm waiting for an upward move in interest rates before I get back in. Preferred share prices will take a licking when, not if, that happens.
Gridbird profile picture
@tennvol_30736, That is the million dollar question. One takes their chances. VIX is low, Fed waved the white flag, German 10 yr Bund flirting with zero again. World economy at present is slowing down.
The bargains were definitely in December and that was some fun profitable preferred trading for me. I like that volatility.
Someone needs to explain how countries like Germany can have zero to negative interest rates and build an economy, explain the rationale. Life is full of surprises and wouldn't be surprised inflation and interest rates rise significantly. It is only a matter of time.
Good to see banks still issuing preferred stock.
This and CFG-D
Why NON-cumulative?? I only have cumulative preferred stocks in my portfolio. Am I missing something?
Gridbird profile picture
@William Nuke, Sorry but you will be not playing in bank preferred sandbox if you need cumulative. Fed regulations for capital purposes have required it for years now. Only 3 tradeable cumulative QDI bank preferreds on the market I am aware of, all grandfathered...MTB-P, MTB-C (they are identical sisters) and FIISO. I own all 3. I have 300 hundred shares of FIISO, but dont put much effort into buying it...Only 23 shares have traded in over a year.
DivvySam profile picture
Another Great Article AT...Thanks...

Not thrilled with the BBB- rating...Geez WFC's ...PW and ...PY were originally rated a little better at BBB.

But I like JPM so I'm waiting for a good entrance of either or both JPM-PC and JPM-PD, as I feel they are a little overpriced at this moment...
Dear ten, it is my understanding that JPM cannot stop paying dividend on the preferred shares unless they stop paying dividend on the common shares. This rule protects the dividend on preferred shares
Gridbird profile picture
@karibruce, it is a very pessimestic view of the issue that one could say on any issue. A more reasoned worry would be capital loss impairment from perpetual yield duration risk from any long end yield curve movement than non payment.
The important issue one should raise about this preferred is that its non-cumulative. The banks is raising capital to meet what I think is a Tier 1 requirement from the Fed.. There is a lot of shaky debt in credit markets and it is not outside the realm of possibility the dividend at some point will be omitted. If the bank doesn't pay the dividend, the shares will lose most of its vaue.
Landlord Investor profile picture
During the GFC neither JPM nor lesser major banks like BAC or C suspended their non-cum preferreds. So while it's not outside the realm of possibility, it would take a financial crisis bigger than the GFC for JPM to suspend.
Not likely JPM would not pay the preferred with emphasis on "not likely". These are troubled times, troubling signs.
I see that you omitted Wachovia.
ChuckXX profile picture
It is somewhat amazing at just how many preferreds and bonds this company can issue.
Chuck XX I agree. JPM is a true Behemoth...... Just wait in 20 more years when they are bigger than most countries in the world! Oops , 20 years is now.....LOL... Long JPM
Best time to buy a new preferred is typically the first or second day. I did and up 2%. Wouldn't buy at current price (<5.5% YTC), any higher and I'll cash out.
jimbob1101 profile picture
Great article and insights!
Always curious how such a large money center bank like JPM continues to receive BBB- ratings (one step away from junk status)? Is it the overall debt levels? Their exposure to any derivatives?
Landlord Investor profile picture
JPM unsecured sr debt is rated A-. Standard practice is jr debt is rated one notch below that and preferreds another notch lower. That should put JPM at BBB. Not sure why their preferreds get another notch lower at BBB-.
Tried to buy it at 25, no luck though. I expect a pullback soon.
Was available for 25.10 - 25.15 if when it started trading if your broker allows gray market trading.
JPM the king of the banking sector preferreds.
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