Morning Commentary: Preferreds stay strong; Prospect Capital lists; Fannie, Freddie weaken

By Stephanie N. Rotondo

Seattle, Dec. 22 – The preferred stock market continued to firm up in early Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points at mid-morning.

While there was a positive tone to the marketplace, a trader noted that volume was dwindling due to the shortened holiday week and upcoming year-end.

“It’s very quiet,” he said. “I think we are done for the year.”

Among recently priced deals, Prospect Capital Corp.’s $150 million of 6.25% $25-par notes due 2024 were admitted to the New York Stock Exchange.

The ticker symbol is “PBB.” The deal came Dec. 3, with UBS Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and RBC Capital Markets acting as joint bookrunners.

The notes were trading at $24.74 at mid-morning, down 11 cents.

Meanwhile, Fannie Mae and Freddie Mac preferreds continued to wane as investors feared that language in the recently passed budget deal would leave the GSEs to languish under conservatorship indefinitely.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were off 13 cents, or 3.88%, at $3.22. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were down 11 cents, or 3.18%, at $3.19.

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