Preferreds stay strong; Prospect Capital’s $25-par notes list; Fannie, Freddie weaken

By Stephanie N. Rotondo

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

The Wells Fargo Hybrid and Preferred Securities index ended 14 basis points higher for the day.

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.”

“Volume was very light,” another market source said.

That source also remarked that while the market was up, in looking at the tape, it more resembled “a Christmas tree. There’s a little red, a little green and even some yellow.”

Furthermore, the activity was being spurred by managers “taking gains, taking losses. Then there’s the tax-related selling that goes on at year-end.”

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 closed off 35 cents, or 1.41%, at $24.50.

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

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