Morning Commentary: Fannie Mae, Freddie Mac in focus on White House news; Targa steady

By Christine Van Dusen

Atlanta, Oct. 20 – Investors were keeping an eye on Fannie Mae and Freddie Mac on Tuesday morning after the White House declined to release the mortgage companies from government control.

In response, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) opened on Tuesday at $5.04, down eight cents, while the 8.25% series T noncumulative preferreds (OTCBB: FNMAT) moved down 14 cents to $7.09.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) dipped 10 cents to open at $5.05.

In other trading, Houston-based Targa Resources Partners LP’s 9% fixed-to-floating rate cumulative redeemable preferred units (TGARP) traded Tuesday morning between $25.00 and $25.05 after Monday's level of $25.00 to $25.10, a trader said.

An additional $15 million of the units were sold Wednesday via Morgan Stanley & Co. LLC, BofA Merrill Lynch, UBS Securities LLC and Wells Fargo Securities LLC. Added to the $110 million initially sold on Oct. 7, total issuance comes to $125 million.

The over-allotment options allowed for up to $16.5 million additional units to be sold.

The new issue from Bluerock Residential Growth REIT Inc. – $62.5 million 8.25% series A cumulative redeemable perpetual preferred stock (BRGPA) that priced last week at $25.00 per share – was seen at $24.85 bid on Tuesday morning.

Wunderlich Securities Inc. and Compass Point were the joint bookrunning managers. DA Davidson & Co. and Janney Montgomery Scott LLC were co-lead managers.

And UMH Properties Inc.’s downsized $45.03 million 8% series B cumulative redeemable preferred stock (UMHPB) that priced at par of $25.00 on Thursday via CSCA Capital Advisors LLC was spotted Tuesday morning at $24.73 bid, the trader said.

On Monday the notes were quoted at $24.67.

The deal came smaller than the previously announced maximum size of up to $50 million and beyond the wide end of price talk that had been set at a dividend of 7.375% to 7.5%.

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