Yesterday, JPMorgan Chase & Company (JPM) sold $4 billion of extendable securities in a self-led deal. The final maturity date of the securities is Dec. 1, 2015. However, the extendable securities contain an option to extend the maturity period at the same or a higher interest rate.
The securities of JPMorgan will float initially at the one-month London Interbank Offered Rate (LIBOR) and then at 4 basis points above LIBOR, at 12 basis points above LIBOR, at 20 basis points above LIBOR and at 26 basis points above LIBOR.
Earlier this month, JPMorgan sold $1.5 billion of notes under private placement. These notes carry a dividend of 7.20% and will be payable semi annually in June and December every year, with first interest to be paid in Jun 2010.
Also, earlier during Sept. 2009, JPMorgan launched a sale of $1.5 billion of senior notes with maturity 2015.
JPMorgan warrants held by the U.S. government were sold for $936.1 million on Dec. 11, 2009. The Treasury Department's second auction of warrants held by the Troubled Asset Relief Program (TARP) drew $10.75 each for 88.4 million securities.
These warrants were acquired by the Treasury in connection with the capital provided to each of the institutions through the $700 billion TARP. The U.S. Treasury Department transferred $25 billion of funds to JPMorgan on Oct. 28, 2008, via the TARP. This was the fifth largest amount transferred under the 2008 TARP bailout bill.
The full repayment of the bailout money by JPMorgan releases it from government intervention, and thus inspires our confidence in the stock. While we anticipate continued synergies from the company's diversification and strong capital position, we believe increasing provisions and worsening credit quality will be a drag on future earnings.
www.istockanalyst.com/article/viewarticle/articleid/3733987
Gruss Albay
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