Midday Commentary: Primary preferred market stays quiet; Freddie, Fannie active as bill discussed

By Stephanie N. Rotondo

Phoenix, April 29 - A preferred stock trader said he had not seen or heard of anything in the pipeline on Tuesday.

"I'm not hearing anything yet," he said. "I'm kind of surprised. I thought we would see some more [new issues]."

Though the primary was muted, the secondary was posting gains early in the session.

The Wells Fargo Hybrid and Preferred Securities index was up 9 basis points as of mid-morning.

Freddie Mac and Fannie Mae paper was moving around a bit, as the Senate Banking Committee was slated to meet to discuss a bill proposed by Tim Johnson (D-S.D.) and Mike Crapo (R-Ida.) to wind down the mortgage guarantors.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were holding in at $10.80 and Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 9 cents at $10.44.

But a trader opined that the bill wasn't going to get far and that if it failed, it would probably fade to the background.

"They have a week to finish mark-up," he said. "So it probably won't happen."

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