Midday Commentary: Preferred market gaining strength; Apollo, AmTrust list; Fannie, Freddie dip

By Stephanie N. Rotondo

Phoenix, June 26 - Preferred stocks continued to firm on Wednesday, though overall liquidity was subdued, aside from a handful of names.

"Everything caught a bid," a trader said. He commented that he had heard the new issue market would remain quiet for the next couple of weeks in order to "let the market calm down."

Among recently priced deals, Apollo Investment Corp.'s $135 million of 6.875% $25-par senior notes due 2043 were admitted to the New York Stock Exchange on Wednesday, as was AmTrust Financial Services Inc.'s $115 million of 6.75% series A noncumulative perpetual preferreds.

The Apollo symbol is "AIY" and AmTrust is "AFSIPA." Apollo was trading at $24.73 at midday, versus opening levels of $24.85. The AmTrust issue was at $23.85, up 60 cents from Tuesday's close.

Apollo priced June 10 and AmTrust came June 4.

In the secondary, Fannie Mae and Freddie Mac preferreds continued to sell off during the midweek session, following the introduction of the so-called "Corker Bill" into the Senate on Tuesday.

The bipartisan bill would bring about a liquidation of the two agencies and would replace them with a new entity, Federal Mortgage Insurance Corp. The new organization would function similarly to the Federal Deposit Insurance Corp.

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