Midday Commentary: Fannie, Freddie rise as hedge funds seek privatization; Oxford Lane prices

By Stephanie N. Rotondo

Phoenix, Nov. 13 - Though the preferred stock market was trending lower on Wednesday, a trader said Fannie Mae and Freddie Mac paper had "jumped" in early trading.

Freddie's 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were up 60 cents, or 7.45%, before noon ET, trading at $8.65. Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 69 cents, or 8.6%, at $8.71.

The gains came on the back of news reports indicating hedge funds invested in the agencies were proposing to convert their $34.6 billion of preferreds and to underwrite a $17.3 billion rights offering in order to take the firms private.

Meanwhile, Oxford Lane Capital Corp. priced another $40,625,000 of its 7.5% series 2023 term preferreds early in the session.

The add-on deal was first announced Tuesday. The company sold $20 million of the paper on June 30.

The additional preferreds were sold at $22.50 per share, which was a slight discount to Tuesday's closing share price of $22.51. Post-pricing, the preferreds came under pressure, falling a quarter, or 1.11%, to $22.26.

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