Morning Commentary: Preferred stock investors play waiting game as Greek saga unravels

By Stephanie N. Rotondo

Phoenix, July 7 – Preferred stock investors continued to sit on the sidelines early Tuesday as the world remained focused on the ongoing Greek drama.

Talk is that there is a verbal debt deal on the table and that Greece will formally propose the deal to E.U. officials on Wednesday. As hopes increase that a deal will get done, Treasury bonds are improving and taking preferreds along with them.

A trader said the bond market was up 1˝ points, while the Wells Fargo Hybrid and Preferred Securities index inched up 2 basis points.

Despite the modest strength seen in the market, a trader noted that Fannie Mae and Freddie Mac paper was selling off. He wasn’t sure what was sparking the move, speculating that “there must be something going on in the courts.”

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off a dime, or 2.65%, at $3.68 at mid-morning. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were down 15 cents, or 3.93%, at $3.67.

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