Entergy Louisiana lists; Entergy Arkansas rises; Seaspan trades mixed; Fannie, Freddie off

By Stephanie N. Rotondo

Seattle, Aug. 18 – Entergy-linked preferred deals were trading busily – but mixed – on Thursday.

For its part, Entergy Louisiana LLC’s $270 million of 4.875% $25-par collateral trust mortgage bonds due 2066 began trading on the New York Stock Exchange on Thursday, following the listing of Entergy Arkansas Inc.’s $410 million of 4.875% $25-par first mortgage bonds due 2066 (NYSE: EAI) on Wednesday.

The ticker for the Entergy Arkansas bonds is “ELC.” Entergy Louisiana priced Aug. 10, while Entergy Arkansas came Aug. 9.

The Louisiana paper was holding around $24.85, a trader reported. However, the paper came in to trade at $24.71, which was lower than opening levels of $24.79.

The Arkansas issue was meantime initially up 4 cents at $24.93, but closed at $24.89. Still, that was better than the $24.88 seen at the open.

Meanwhile, Seaspan Corp. priced $80 million more of its 8.2% series G cumulative redeemable preferreds (NYSE: SSWPG), adding to the $115 million already outstanding.

The add-on was sold to institutional and other professional investors in Asia.

The preferreds were drifting lower in trading, falling 14 cents to $25.67.

As for the 7.875% series H cumulative redeemable preferreds (NYSE: SSWPH) – a $225 million issue priced Aug. 4 – they were up 6 cents at $24.87 at mid-morning. The preferreds eventually closed at $24.82, up just a penny.

Fannie, Freddie pressured

A trader said he was “seeing some selling pressure” in Fannie Mae and Freddie Mac preferreds on Thursday.

However, he was not sure why the paper was softening.

“I’m assuming it’s a court thing,” he said, referring to the myriad stakeholder lawsuits filed against the government in relation to its 2012 “net worth sweep.”

But another market source said the weakness was more benign than that.

“There have been a couple of negative media stories out there over the past day or [so],” the source said. “But really there was no new information in those stories.

“Obviously, it is a volatile situation,” he added.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) retreated a nickel, or 1.15%, to $4.28. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) waned 2 cents to $4.18.

Common and preferred shareholders alike are hoping the Court of Appeals will overturn a previous ruling that said the groups had no standing to sue the government over the decision to take virtually all of the GSEs’ profits, leaving them not only without any funds to pay dividends to those stakeholders, but also without any ability to build up any capital cushion.

The lack of a cushion has worried investors and legislators, as the mortgage giants could need another bailout should the economy tank yet again.

From a legislative standpoint, many proposals have come forth regarding what to do with Fannie and Freddie, which have operated under conservatorship since the financial crisis took them down the drain. But so far, Congress has been unable to agree on any GSE reform measures. In all likelihood, the issue will be passed on to the next president, but neither the Democratic nor the Republican nominees have broached the subject.

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