Morning Commentary: Fannie, Freddie report earnings, preferreds rise; AmTrust numbers ‘great’

By Stephanie N. Rotondo

Phoenix, Aug. 7 – The preferred stock market was on the rise Thursday as new jobs data showed improvement.

The Wells Fargo Hybrid and Preferred Securities index was up 24 basis points at mid-morning as jobless claims dropped to 289,000 and the four-week average hit an eight-year low.

Fresh earnings were driving Fannie Mae and Freddie Mac paper higher. A trader said that both mortgage giants reported profits that were below those seen in 2013, but the figures still beat expectations.

Additionally, the two government-sponsored entities plan to pay a combined $5.6 billion to the government.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) inched up a penny to $11.51, while Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) increased a nickel to $12.00.

AmTrust Financial Services Inc. was also getting boosted by “great earnings,” the trader said. He remarked that the bank’s preferreds “jumped this morning, but they have kind of settled back down.”

The 7.25% series B noncumulative preferreds (NYSE: AFSIPB) were up 29 cents, or 1.22%, in early trades at $24.22.

In recently priced deals, Paragon Shipping Inc.’s $25 million of 8.375% $25-par senior notes due 2021 were seen around $24.50.

The deal priced Tuesday.

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