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Market sinks; Ladenburg Thalmann's cumulatives list; Fannie, Freddie volatile, end mixed
By Stephanie N. Rotondo
Phoenix, May 29 - The Treasury bonds' decline on Tuesday was continuing to wreck havoc on the preferred market during Wednesday trading, a trader said.
A market source said the preferred stock space was down about 12 cents per share on average after the market closed.
In new listings, Ladenburg Thalmann Financial Services Inc.'s 8% series A cumulative redeemable preferreds were admitted to the New York Stock Exchange on Wednesday.
The deal priced May 21 and was first announced as a $50 million offering on May 14.
The paper was trading at $24.67 at midday, versus opening levels of $24.50.
The preferreds finished at $24.70.
But the big news of the day was Fannie Mae and Freddie Mac, whose securities were off significantly in early trading.
The various preferred issues ended the day in mixed fashion.
Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were down 57 cents, or 8.52%, at $6.12 at midday. At the close, the issue was down just 3 cents at $6.66.
Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were meantime down 50 cents, or 7.81%, at $5.90 around lunchtime. But the paper managed to end the day up 15 cents, or 2.34%, to $6.55.
A trader said there was "nothing definitive" that was causing the dip in the preferreds - the common stock was swinging wildly as well, he said - but noted that the rumor mill was running overtime in regards to the government-backed mortgage giants' future.
Another source said the volatility in the name was "speculative" in nature. There was no real news, he said, but it seemed as if one investor decided to take some profits, which led to another following suit, then another, and so on. He deemed it the "group herd mentality" as investors looked to "lock in gains."
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