Fannie, Freddie rise as Bove sees settlement; Goodrich cancels dividends, preferreds drop

By Stephanie N. Rotondo

Phoenix, Aug. 31 – Preferred stocks were following the equity markets lower on Monday, though a trader noted that it was amid limited liquidity.

“It is dead,” he said.

The Wells Fargo Hybrid and Preferred Securities index ended down 8 basis points. The index was off 11 bps at mid-morning but came back to trade flat to even slightly better in the afternoon, only to retreat later in the day.

As for the equity markets, the Dow Jones industrial average fell over 115 points on the day, bringing the month’s total declines to about 6%. The weakness echoed that seen in the previous week, as investors grew more concerned about China’s economic instability.

Fannie Mae and Freddie Mac paper, however, was moving up as investors reacted to news out Friday regarding a potential settlement between shareholders and the federal government.

“They are all up 20 to 30 cents,” a trader said of the GSE preferreds.

Meanwhile, Goodrich Petroleum Corp. was on the decline after the company cut its dividend payments.

That softness came even as domestic crude oil prices popped 7.56% to trade at $48.64 a barrel for October delivery. Those gains were attributed to reports that OPEC members were willing to engage with producers in an effort to stem production amid a global oversupply and the resulting lower prices.

And while Goodrich preferreds were down on the day, other oil and gas preferreds were on the rise.

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