Market mixed and quiet as week ends; Fannie, Freddie still under pressure; Citigroup gains

By Stephanie N. Rotondo

Phoenix, Aug. 9 - Preferred stock market indicators were mixed Friday, and a trader said that overall activity was light.

Fannie Mae and Freddie Mac preferreds continued to be more active than other issues, however, and remained under pressure in early trading despite reporting profits earlier in the week.

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 4 cents at midday at $4.63. Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) had slipped a penny to $4.65.

But by the end of the day, the preferreds had regained some ground.

The Fannie paper ended up 3 cents at $4.70. Freddie also closed at $4.70, up 4 cents.

As reported on Thursday, most market players are expecting the government to continue with plans to wind down the two mortgage giants, despite a return to profitability.

For the second quarter, Fannie posted a $10.1 billion profit, while Freddie saw profits of $5 billion.

"[The government] can't just throw that money away," a trader said.

Fannie intends to make a $10.2 billion dividend payment to the Treasury in September. Once that payment is made, Fannie will have paid $105 billion to taxpayers, after taking $117.1 billion in 2008.

For its part, Freddie is planning to make a $4.4 billion payment, bringing its total paid to the Treasury up to $41 billion.

Freddie took $71 billion in bailout funds.

Citigroup busy, better

Citigroup Inc.'s 7.875% fixed-to-floating rate trust preferreds (NYSE: CPN) were trading actively and higher on Friday.

The issue closed the day at $27.45, up 2 cents.

The issue is not supposed to be callable until Oct. 30, 2015. However, because of new rules under Dodd-Frank, the issue could be called sooner, as it no longer qualifies as Tier I capital.

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