Preferreds boosted by Bernanke comments; INTL FCStone paper on tap; Fannie, Freddie lower

By Stephanie N. Rotondo

Phoenix, July 11 - Preferred stocks were on the rise Thursday, pushed up by Federal Reserve chairman Ben Bernanke's comments that he stands ready to implement quantitative easing, a trader said.

Even an increase in applications for unemployment benefits - which could indicate that "the market is not as strong" as some think, the trader said - did little to put a damper on things.

"People are just more comfortable that this market will stay here for awhile," the trader said. "If that is the case, then these preferreds look cheap."

However, "volume was kind of on the lighter side though, all things considered," a market source said. "So it wasn't like it was a good solid rally."

Another $25-par senior notes offering was added to the calendar on Thursday, as INTL FCStone Inc. said it intended to sell some seven-year paper.

A trader said he had heard price talk was around 8.5%, though he had not seen any market on the deal.

The New York-based brokerage will use the proceeds for general corporate purposes, including internal growth and acquisitions.

On Wednesday, the company pulled out of a deal to buy Asian commodity group Cleartrade Exchange due to increased regulatory restrictions based on Dodd-Frank.

Fannie, Freddie buck trend

Fannie Mae and Freddie Mac were in the news again as House Republicans unveiled legislation that would wind down the two mortgage firms.

As a result of the news, the agencies' preferreds dipped.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) dropped 13 cents, or 2.48%, to $5.12 and Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) declined by 11 cents, or 2.15%, to $5.00.

If passed, the bill would end both Fannie Mae and Freddie Mac in five years and would reduce the government's role in the mortgage market.

Critics of the bill, however, say it would result in increased mortgage rates and would require higher down payments for Federal Housing Administration loans.

Last month, senator Bob Corker introduced similar legislation to the Senate.

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