American Express has replaced $1.6bn of preferred shares with $1.6bn of preferred shares, and the new ones pay 2.9 points more

September 15 does three jobs in one filing.

It is the day American Express says it will redeem its Series D preferred shares in full. It is the day the first dividend falls due on the Series E preferred shares the company issued on Wednesday. And it is the day the Series D rate was due to reset, under a certificate the company filed in New York five years ago. The 8-K carrying all of it reached the SEC at 17:29 on Wednesday evening, the last item on the day's list of current reports.

The two securities are the same size and the same shape. Each is 1,600 preferred shares with a liquidation preference of $1,000,000 apiece, deposited against 1,600,000 depositary shares, each representing a thousandth of one share. That is $1.6bn in 2021 and $1.6bn now.

The rate

The Series D pays 3.550 percent. The Series E pays 6.450 percent.

Both are fixed rate reset instruments, which means the coupon holds until a stated date and then floats off the five year Treasury yield. The Series D was fixed to 15 September 2026, and from that date it would have paid the five year Treasury rate plus 2.854 percent. The Series E is fixed to 15 September 2031, and from that date it pays the five year Treasury rate plus 2.119 percent.

So the coupon is 2.900 points higher and the spread promised over Treasuries at reset is 0.735 points lower.

On the stated rates and the stated liquidation preference, the annual dividend on the new series works out at $103.2m against $56.8m on the old one.

What the filing is not

It is not a notice of redemption, and it says so in a sentence of its own. The company says it plans to send one to holders of the Series D depositary shares, which will result in redemption in full on 15 September at $1,000,000 per preferred share, equivalent to $1,000 per depositary share, plus any declared and unpaid dividends.

The underwriting agreement is dated 5 August and the sale closed on 12 August. Cleary Gottlieb Steen and Hamilton wrote the legality opinion. Nowhere in the filing, the certificate or the exhibit list does the company say why it is doing this.