Preferreds trend flat to open week; FOMC meeting, rate decision eyed; New York Community frees

By Stephanie N. Rotondo

Seattle, March 13 – The preferred stock market was somewhat flat in Monday trading, though a trader commented that dealings were muted.

“It will probably be quiet this week,” the trader said, pointing not only to the Federal Reserve’s upcoming policy meeting but also to expected snow in the Northeast.

“This whole week is going to be wait and see,” he said.

“The market was flat today on light volume,” another market source said.

The Wells Fargo Hybrid and Preferred Securities index was slightly firm for most of the day but ended off 1 basis point. The iShares U.S. Preferred Stock exchange-traded fund, however, ended up 7 bps.

The Fed’s Federal Open Market Committee is slated to meet this week, with an announcement expected on Wednesday regarding whether or not interest rates were increased.

It is largely believed that rates will increase by 0.25%. However, the market will be looking for clues as to how many increases may come this year and in what increments.

New York Community jumps

In preferred dealings, New York Community Bancorp Inc.’s $500 million of 6.375% series A fixed-to-floating noncumulative preferreds, a deal that priced Friday, freed to trade early Monday.

A source pegged the preferreds at $25.35, though he added that the volume-weighted average price was “a better indication” at $25.08.

A trader saw the paper at $25.15 bid at mid-morning.

“That jumped dramatically since Friday,” he noted. At Friday’s close, the issue was at $24.80, he said.

The trader also commented that it wasn’t clear what had caused the surge, though he opined that it was due to manager support.

The issue is trading under a temporary ticker symbol, “NYBCP.”

Among other recent issues, Spark Energy Inc.’s $35 million of 8.75% series A fixed-to-floating cumulative redeemable preferreds, a deal that priced Wednesday, was “getting firmer,” a source said.

He saw the issue closing at $24.62.

In earlier trading, a trader saw the preferreds at $24.57.

That issue also has a temporary ticker symbol, “SKYQP.”

Two Harbors Investment Corp.’s $125 million of 8.125% series A fixed-to-floating cumulative redeemable preferreds were meantime seen closing at $24.85. But a source remarked that the volume-weighted average price was a dime weaker than that.

At mid-morning, a trader pegged the paper at $24.65.

The deal, which came March 7, has a temporary ticker symbol, “TWHBP.”

Rounding out recent deals, PennyMac Mortgage Investment Trust’s $115 million of 8.125% series A fixed-to-floating cumulative redeemable preferred stock listed on the New York Stock Exchange on Monday under the ticker symbol “PMTPrA.”

The preferreds ended at $24.68, compared to $24.70 at the open.

The deal came March 2, upsized from $75 million and in line with price talk.

Away from recently priced preferreds, Fannie Mae and Freddie Mac were active and better on the day, though there was no fresh news to act as a catalyst.

Fannie’s 8.25% series S fixed-to-floating noncumulative preferreds (OTCBB: FNMAS) rose 45 cents, or 6.05%, to $7.89. Freddie’s 8.375% fixed-to-floating noncumulative preferreds (OTCBB: FMCKJ) improved 29 cents, or 4.09%, to $7.38.

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