Morning Commentary: JPMorgan, Freddie Mac dip; Treasury rally helps steady preferreds

By Christine Van Dusen

Atlanta, Feb. 20 – Investors were interested on Friday morning in preferred stock issues from JPMorgan Chase & Co., Freddie Mac and Fannie Mae as a small rally in U.S. Treasuries helped to steady the preferred stock market.

JPMorgan Chase’s $1.38 billion of 6.125% series Y noncumulative preferreds – slated to list on the New York Stock Exchange on Monday as “JPMPF” – ticked down on Friday morning, a trader said.

The preferreds were seen Friday morning at about $24.90, down 2 cents from Thursday’s $24.92, he said.

“They’re hanging in there,” he said, noting the paper was “marginally steadier today. They probably were trading as low as $24.85 on Thursday as bonds were getting whacked on Wednesday and Thursday, but with the tick up in Treasuries it’s quiet, a bit.”

The deal priced Feb. 5 with $1.2 billion shares sold. A $180 million greenshoe was exercised Feb. 9.

Freddie Mac, which reported disappointing fourth-quarter earnings on Thursday, also saw its preferreds dip on Friday morning. The mortgage company’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were spotted Friday morning at $4.43, down 2 cents from the previous day’s close.

Freddie Mac’s net income for the fourth quarter missed estimates at $227 million, versus $8.6 billion in the pervious year, as a result of losses from investments. Even the news that a government-sponsored entity was planning to make a $900 million dividend payment to the Treasury Department next month – bringing the total amount paid back up to $91.8 billion – the agency’s preferred shares weakened at the end of the week.

Meanwhile, sister agency Fannie Mae saw its 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) traded at $4.70, up 7 cents from Thursday.

Volumes light

In other trading on Friday morning, Barclays Bank plc’s 8.125% non-cumulative callable dollar preference shares, series 5 ADR, were down 2 cents to $26.70 on 24,180 shares traded.

RBS Capital Funding Trust V’s 5.9% noncumulative guaranteed trust preferred securities were seen dipping 3 cents to $24.55 on 23,347 shares traded.

And Deutsche Bank Contingent Capital Trust III’s 7.6% trust preferred securities moved up 3 cents to $27.90 on 12,145 shares traded on Friday morning.

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