Morning Commentary: Unsealed documents push Fannie, Freddie higher; oil-related preferreds climb

By Christine Van Dusen

Atlanta, April 12 – Fannie Mae and Freddie Mac were in focus on an otherwise quiet Tuesday morning following reports that the federal government knew, when it bailed out the mortgage giants, that the companies would be able to deliver sustainable profits over time.

This revelation came from unsealed documents from a shareholder lawsuit that stemmed from the government’s 2012 decision to change the terms of its bailout of Fannie Mae and Freddie Mac and sweep its profits to the Treasury.

In response, Fannie Mae’s 5 3/8% non-cumulative preferreds, series I, (FNMAG) were up 50 cents to $4.50 on Tuesday morning. The company’s fixed-to-floating-rate non-cumulative preferreds, series S, (FNMAS) climbed 24 cents to $3.35.

Freddie Mac’s 8 3/8% non-cumulative perpetual convertible preferreds (FMCKJ), meanwhile, lifted 25 cents to $3.39 while its 6.55% non-cumulative perpetual preferreds (FMCKI) rose 20 cents to $2.50.

“With all new rumors or court actions, these things get whipsawed around quite a bit,” a trader said.

Meanwhile, oil futures continued to move higher as investors hoped oil producers would soon stabilize production.

Legacy Reserves LP’s 8% series B fixed-to-floating rate cumulative redeemable perpetual preferred units (Nasdaq: LGCYO) climbed 33 cents to $3.60 on Tuesday morning.

The 8% series A fixed-to-floating rate cumulative redeemable preferred units (Nasdaq: LGCYP) were higher on Tuesday morning by 49 cents, trading at $3.73.

And Breitburn Energy Partners LP’s 8.25% series A cumulative redeemable perpetual preferred units (Nasdaq: BBEPP) ticked higher by 35 cents to $4.88 on Tuesday.

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