Preferred stocks dip with long bond; Fannie, Freddie remain active, stronger; Ally mixed

By Stephanie N. Rotondo

Phoenix, Sept. 5 - Preferred stocks were selling off a bit as long Treasuries came in on the back of "better than expected" jobs numbers, according to a trader.

"The Treasury market was off significantly," another market source said. "That will kind of ruin your day in the preferred market."

As of midday, the Wells Fargo Hybrid and Preferred Securities index was off 28 basis points, or about 7 cents per share on average for $25-par paper. At the close, the index was off 59 bps, or almost 15 cents per $25-par share.

Though a market source had indicated that volumes were improving in the previous session, Thursday trading was muted aside from continued activity in Freddie Mac and Fannie Mae preferreds.

The agencies' preferreds were boosted on Wednesday after Fairholme Capital's Bruce Berkowitz went on CNBC stating that the securities were attractive and calling for the government to return the entities to private hands.

Come Thursday, the securities remained firm as Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) rose a dime, or 1.88%, to $5.42. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) increased 14 cents, or 2.63%, to $5.47.

Ally ends mixed

Ally Financial Inc.'s preferred stock was mixed Thursday following Wednesday's pricing of $750 million of 4¾% notes due 2018.

The series B preferreds (NYSE: ALLYPB) improved 15 cents to $26.55, while the series A securities (NYSE: ALLYPA) dipped a penny to $26.39.

The upsized corporate bond issue came at a discounted price of 99.123 to yield 4.95%. Proceeds from the offering will be used to pay off debt.

The issuance was originally expected to be in the neighborhood of $500 million.

Ally is a Detroit-based financial services company.

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