Midday Commentary: Resource Capital planning new issue; Freddie, Fannie preferreds gaining ground

By Stephanie N. Rotondo

Phoenix, June 3 - Preferred stocks were retreating in early Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities Index was down 4 basis points at mid-morning.

The primary market continued to see deals trickling out, despite the weak tone of the overall space.

Resource Capital Corp. announced an offering of at least $75 million series C fixed-to-floating rate cumulative redeemable preferreds.

A trader said price talk was in the 8.75% area.

The deal will not be rated.

In the early gray market, the paper was trading at $24.80 offered, according to a trader.

Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunners.

The dividend will be fixed until July 30, 2024, at which time it will begin to float at Libor plus a spread.

Fannie, Freddie up

Meanwhile in the secondary, a trader said Fannie Mae and Freddie Mac paper were moving higher "because [billionaire investor Carl] Icahn bought some."

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 24 cents, or 2.34%, at mid-morning at $10.50. Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) had risen 27 cents, or 2.5%, to $10.97.

But the mortgage giants were making headlines for other reasons, as well. Late Monday, Massachusetts Attorney General Martha Coakley filed a lawsuit against the agencies, claiming they were in violation of state law because they would not negotiate lower terms on home loans.

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