Distressed debt mixed in Tuesday trading; Fannie preferreds rise on record profit, Freddie up

By Stephanie N. Rotondo

Phoenix, April 2 - A rising stock market and an uptick in the high-yield bond new issue calendar kept distressed debt investors preoccupied on Tuesday.

"The stocks were up again, that was the big deal," one trader said.

Fannie Mae and Freddie Mac preferreds gained ground on earnings news from Fannie Mae.

Of the day's dealings, a trader said NII Capital Corp.'s debt was "a little better" on the day, despite no fresh news out on the Reston, Va.-based company.

He said the 7 5/8% notes due 2021 hit a high of 73 before settling back in to 72¾ bid, 73¼ offered. The 8 7/8% notes due 2019 traded up to 761/2.

Another trader pegged the 7 5/8% notes at 723/4, which he deemed unchanged.

Also rising on no news was San Antonio-based Clear Channel Communications Inc.'s 11% notes due 2016.

A trader saw that issue gaining about a point to close around 801/2.

A second trader, however, called the 9% notes due 2021 flat at 93 5/8.

Meanwhile, Ambac Financial Group Inc.'s bonds - which tend to trade on top of one another - were seen "coming in a little" to trade in a 68 to 69 context.

Fannie, Freddie firm

Fannie Mae and Freddie Mac preferreds posted double-digit gains on Tuesday, as Fannie came out with its latest 10-Q Securities and Exchange Commission.

Freddie's 8.375% fixed-to-floating noncumulative preferreds (OTCBB: FMCKJ) gained 50 cents, or 14.79%, to $3.88. Fannie's 8.25% series S fixed-to-floating noncumulative preferreds (OTCBB: FNMAS) also closed at $3.88, which was up 53 cents, or 15.82%.

And, Fannie's 8.25% series T noncumulative preferreds (OTCBB: FNMAT) increased by 49 cents, or 13.96%, to $4.00.

On Tuesday, Fannie reported its results for the fourth quarter and full year of 2012. The release of the earnings had previously been delayed as the government-backed mortgage provider tried to ascertain whether a return to profitability would trigger an accounting change related to its deferred tax assets.

For the year, Fannie reported a record profit of $17.2 billion. Of that amount, $7.6 billion was made in the fourth quarter.

The agency said it paid a $4.2 billion dividend to the U.S. Treasury in the first quarter and that it is contemplating paying taxpayers as much as $58.9 billion later this year.

Since being taken into conservatorship in 2008, Fannie has received over $116 billion in taxpayer funds. Since then, the company has paid back over $35.5 billion.

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