Preferreds dive in final trades; Fannie Mae, Freddie Mac rebound; TravelCenters prices

By Stephanie N. Rotondo

Phoenix, Sept. 30 – The preferred stock market was bouncing back in midweek trading following two days of hefty losses.

However, a market source noted that “in the last couple of minutes,” the market took a downward turn, though he remarked he did not “think it was very meaningful.”

The Wells Fargo Hybrid and Preferred Securities index ended off 13 basis points, though its was up 13 bps at mid-morning. The index closed Tuesday’s session off 12 bps and down 24 bps on Monday.

The initial gains were due in part to a new jobs number that showed the private sector adding 200,000 jobs in September. A trader said the figure was “a little more promising” than what was expected.

Fannie Mae and Freddie Mac paper was also recuperating with the wider marketplace.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) rose a dime, or 2.11%, to $4.85, as Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) gained 11 cents, or 2.3%, to $4.90.

There was no fresh news out on the mortgage giants, though there has been ongoing speculation about legislative action in regards to reforming the GSEs.

The new issue calendar saw a deal added as TravelCenters of America LLC announced plans to sell a minimum of $50 million $25-par senior notes due 2030. The deal was later upsized to $100 million and priced at par to yield 8%.

Price talk was 8% to 8.125%, according to a market source.

Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets and UBS Securities LLC are running the books.

A trader saw the issue trading at $24.65 in the gray market but speculated that the deal “should do well,” given that the company’s other two outstanding issues – the 8% $25-par notes due 2029 (NYSE: TANO) and the 8.25% $25-par notes due 2028 (NYSE: TANN) – “both trade above par.”

The 8% notes were slipping a little on word of the new deal, however, falling 31 cents to $25.14. The 8.25% notes were up 18 cents at $25.14.

“The [common] stock has been beat up,” the trader noted, further opining that proceeds could be used to fund a common stock repurchase, “which is probably a smart move.”

The equity (NYSE: TA) closed off 9 cents at $10.33.

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