Midday Commentary: Fannie, Freddie stay in focus, decline; Atlas Pipeline to bring new deal

By Stephanie N. Rotondo

Phoenix, March 12 - Preferred stock investors continued to focus on Freddie Mac and Fannie Mae Wednesday in the wake of a new plan put forth by a bipartisan Senate group.

The agencies' preferreds were "jumping all over," a trader said, seeing the $25-par securities down about $1.00 early in the session.

On Tuesday, a group of senators said it had a new bipartisan plan to wind down the mortgage giants. Though the preferreds initially turned higher, the market eventually pushed the paper downward, and those declines continued into Wednesday trading.

However, a trader said he doesn't think the deal will get very far, opining that it was simply a way to remove the Freddie/Fannie issue from the ballots come this election cycle.

"This plan has no legs," he said.

In the primary, Atlas Pipeline Partners LP announced plans to sell at least $75 million of class E cumulative redeemable perpetual preferred units.

Price talk is 8.25% to 8.375% on the non-rated deal, a trader said.

Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunners. Stifel Nicolaus & Co. is the joint lead manager and MLV & Co. LLC is the co-manager.

A trader said he had yet to see any gray markets for the units.

Also, Public Storage Inc.'s $225 million of 6.375% series Y cumulative preferreds - a deal that priced late Monday - was moving up, as a trader pegged the recent deal at $24.84.

The Wells Fargo Hybrid and Preferred Securities index was trading down 6 basis points as of mid-morning.

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