Fannie most active, closes higher; Bank of America preferreds boosted by management shake-up

By Stephanie N. Rotondo

Portland, Ore., Sept. 7 - Preferred stocks were trending higher Wednesday, following the common equity market's lead.

Still, volume remained light.

"It was a pretty slow day, volume-wise," a trader said. In fact, Fannie Mae had the largest volume of the day, "which is usually a sign of how slow things can be," the trader said.

The Fannie Mae issues closed higher by about 20 to 30 cents.

Meanwhile, most of Bank of America Corp.'s issues gained ground on news of a management shake-up.

One trader said that an austerity plan passed in Italy might have also helped push the bank higher. He speculated that Thursday's session might see an uptick for foreign-based insurers and banks on the back of the austerity plan.

Among foreign issuers, Royal Bank of Scotland Group plc was "kind of mixed," a trader said. He noted that volume in the name was thin overall. However, an RBS issue did make the day's most active list.

Fannie active, better

Three Fannie Mae issues - the series P variable-rate non-cumulative preferreds (OTCBB: FNMAH), the 8.25% series T non-cumulative preferreds (OTCBB: FNMAT) and the 8.25% series S fixed-to-floating-rate non-cumulative preferreds (OTCBB: FNMAS) - topped the day's most active list, according to a trader.

He said the rise of the Fannie issues was indicative of the low amount of trading going on.

The Ps closed 20 cents higher at $1.85, and the Ts gained 30 cents, closing at $2.25. The series S preferreds meantime increased 25 cents to $2.20.

Last week, the Federal Housing Finance Agency - the regulator of Fannie and its brother Freddie Mac - filed a lawsuit against 17 lenders, citing fraudulent acts in regards to mortgage-backed securities sold by the lenders to Fannie and Freddie. Because of the losses Fannie and Freddie incurred due to the securities, the solvency of both entities has come into question and lawmakers have been debating what to do next.

Bank of America boosted

A management shake-up at Bank of America "has been positive for the preferreds," a trader said.

"Definitely most Bank of America issues were up today," said another trader.

The 8.2% series H depositary shares (NYSE: BACPH) were among the most actively traded securities of the day, with over 522,000 shares turning over. The shares moved up 30 cents to $24.04.

Late Tuesday, the Charlotte, N.C.-based bank said that Joe Price, head of consumer banking, and Sallie Krawcheck, head of global wealth and investment management, had left their posts. They were replaced by David Darnell and Tom Montag, respectively.

A trader said the management changes are an attempt to "streamline" operations at the bank, which certainly could be viewed as positive and could explain the gains in the preferreds. However, he remarked that he is "not sure if [the gains] are a function of the general positive tone of the market."

Still, "I'm sure that's a good thing," he said of the executive changes.

RBS ends mixed

Italy passed an austerity plan on Wednesday, and a trader opined that the approval was part of what helped Bank of America preferreds.

He also speculated that the plan's OK could bring gains to foreign-based issuers in Thursday trading.

But on Wednesday, the news was only partially helpful to RBS, which ended the day "kind of mixed," according to another trader.

Of RBS' various issues, the 5.75% non-cumulative dollar preference series L shares (NYSE: RBSPL) were the most active, with volume of about 425,000 shares. They lost 13 cents to end at $16.35.

The 6.08% non-cumulative guaranteed trust preferreds (NYSE: RBSPG) finished 24 cents higher at $9.95. Volume, however, was significantly less at just over 70,000 trust preferreds.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.