Entergy Texas prices $25-par bonds; Fannie, Freddie preferreds up on regulator's comments

By Stephanie N. Rotondo

Phoenix, May 13 - New deals continued to be added to the primary pipeline on Tuesday as Entergy Texas Inc. announced a sale of $25-par first mortgage bonds due 2064 early in the session.

Price talk was around 5.75% before the deal priced, according to a market source.

The deal priced around the close, with $135 million of the notes being sold at par to yield 5.625%.

"It's doing very well," a trader said post-pricing, seeing the issue trade at $25.20.

Morgan Stanley & Co. LLC, BofA Merrill Lynch and Wells Fargo Securities LLC are the joint bookrunning managers.

The company plans to use the proceeds to redeem debt bearing a higher interest rate.

From Monday's business, Apartment Investment and Management Co.'s $125 million of 6.875% class A cumulative perpetual preferreds were also faring well, according to a trader.

He saw a $25.15 bid for the paper.

However, NorthStar Realty Finance Corp.'s $225 million of 8.75% series E cumulative redeemable perpetual preferreds were seen below par at $24.70 bid, $24.75 offered.

Overall, the preferred market was on the firm side.

The Wells Fargo Hybrid and Preferred Securities index was up 9 basis points as of mid-morning. It closed the session up 12 bps.

Fannie, Freddie gain

Fannie Mae and Freddie Mac preferreds were getting a boost on Tuesday as the regulator overseeing the agencies laid out new policies aimed at easing the mortgage markets.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) rose 29 cents, or 2.64%, to $11.27. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) was up hugely at mid-morning, rising 42 cents, or 4.02%, to $10.87.

The latter issue closed at $10.94, up 49 cents, or 4.69%.

In his first speech since taking over the position of Federal Housing Finance Agency director in January, Mel Watt said that the mortgage guarantors would not impose a time restriction on when banks must buy back faulty loans. Watt also said the agencies intend to relax mortgage payment history requirements.

Both proposals are aimed at loosening up the mortgage credit market and to entice new homebuyers.

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