Preferreds rise, then fall a bit; Fannie Mae, Freddie Mac still in focus; Qwest climbs

By Christine Van Dusen

Atlanta, Oct. 6 – The preferred stock market shot up on Monday and then faded in the afternoon as investors continued to watch Fannie Mae and Freddie Mac.

The two home mortgage companies at first recovered some of the previous week’s losses, which were tied to news that a federal judge had dismissed lawsuits alleging it was illegal for Fannie and Freddie to give profits to the government.

But some of those gains were lost by the afternoon, with Fannie Mae down between 1% and 4% and Freddie Mac down between 4% and 7%, a market source said.

Still the overall market finished the day up about 11 basis points, he said.

“It had been up twice that much by late morning,” he said. “Volume was on the light side.”

This was true for Duke Realty Corp.’s 6.5% depository shares series K cumulative preferred shares, which on Monday morning moved up 8 cents to $25.23 on 114,434 shares traded.

Royal Bank of Scotland’s 5.75% noncumulative dollar preference shares, series L ADR, rose 9 cents to $23.25.

And Barclays Bank plc’s 8.125% non-cumulative callable dollar preference shares, series 5 ADR, ticked up 4 cents to $25.86.

In other trading on Monday, Qwest Corp. got a lot of attention. The company’s $500 million issue of 6.875% $25-par senior notes due 2054 (NYSE: CTV) – which priced Sept. 22 – lifted to $24.70 on Monday morning, following Friday’s close of $24.59, and finished the day at about $24.73.

“The deal got into some weak hands, sold off a bit, but was actually trading much cheaper than other Qwest paper,” the trader said. “Now it’s just coming back to where it should have been.”

The preferreds finished the session up 14 cents on volumes totaling 571,000.

Also on Monday, RBS Capital Funding Trust V’s 5.9% noncumulative guaranteed trust preferred securities, series E, moved up 5 cents to $23.75 on 592,000 shares traded.

The Bank of New York Mellon Corp.’s series C preferreds ended the session at $22.89, up 3 cents, on volume totaling 342,910.

“The secondary market is trading mostly flat,” a trader said. “No real outflows, no inflows. We’re really not seeing money move around enough, so there’s no reason for preferreds to move.”

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