Preferreds firmer as week winds down; Fannie, Freddie slide; rebalance prompts action

By Stephanie N. Rotondo

Phoenix, April 4 - Preferred stocks were just slightly better in early Friday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 1 basis point as of mid-morning. It closed the day up 9 bps.

A trader said the Bureau of Labor Statistics' new jobs number was helping out. According to the report, 192,000 jobs were added in March and the unemployment rate held steady at 6.7%.

Fannie Mae and Freddie Mac preferreds were again becoming topical as the agencies' former regulator, James Lockhart, opined that the securities were "worthless" in an interview with Reuters.

That didn't bode well for the preferred shares, as Freddie's preferreds (OTCBB: FMCKJ) dropped 45 cents, or 4.17%, to $10.35 and Fannie's securities (OTCBB: FNMAS) lost 40 cents to close at $9.90.

The Fannie issue had previously been trading north of $10.00 per share.

But a trader noted that another news graphic was circulating that showed how much the GSEs had paid back to the government post-bailout - and how based on that amount, the firms could have paid off at least 80% of the principal amount of their outstanding preferreds.

Rebalance creates activity

Several of the day's most actively traded issues were included in Standard & Poor's most recent rebalancing.

The rebalancing was announced late Thursday and will go into effect at the close on April 17.

The Allstate Corp.'s 6.625% series E noncumulative preferreds (NYSE: ALLPE) rose 4 cents to end at $25.25. American Realty Capital Properties Inc.'s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) meantime put on 9 cents to finish at $22.91.

That issue was the most active of the S&P-rebalance issues, with over 1.3 million shares trading.

Digital Realty Trust Inc.'s 7.375% series H cumulative redeemable preferreds (NYSE: DLRPH) also made the list, gaining 9 cents to $25.03.

And, JPMorgan Chase & Co.'s 6.7% series T noncumulative preferreds (NYSE: JPMPB) earned 6 cents, closing at $25.49.

The rebalance will add 14 preferred issues to the S&P preferred stock index. Four other issues will be dropped.

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