Market wobbles to start week; DDR sells upsized preferreds; Wells Fargo, Astoria listed

By Stephanie N. Rotondo

Phoenix, March 25 - A preferred stock trader was surprised that preferreds were not trading higher as Monday's session got underway.

"I thought with everything getting cleared up in Cyprus, we'd see a rally," he said. "We started off strong but then it faded."

He also noted that "it sounds like a lot of people are out on vacation."

"It was kind of an odd day," another market source said. He called the preferred arena "down a touch, but not much, maybe 1 to 2 pennies."

In the primary, DDR Corp. announced a new deal, an offering of class K cumulative redeemable preferreds.

Price talk was 6.25% to 6.375%, according to a trader. The deal came at the tight end of talk, and the size was upped to $150 million from $100 million.

In new listings, Wells Fargo & Co.'s $575 million of 5.25% series P class A noncumulative perpetual preferreds hit the New York Stock Exchange, as did Astoria Financial Corp.'s $135 million issue of 6.5% noncumulative perpetual preferreds, a deal that came March 12.

The biggest trading in the secondary remained in Fannie Mae and Freddie Mac issues, according to a market source.

"I think it still has to do with the deferred tax assets," he said. "I haven't seen anything new."

DDR's new deal

DDR, a Beachwood, Ohio-based real estate investment trust, brought a $150 million offering of 6.25% class K cumulative redeemable preferreds on Monday.

The deal was at the tight end of talk and was increased from $100 million.

A trader saw the paper trading at less 23 cents in the midday gray market.

Shortly before the close, the trader quoted the issue at $24.60 bid, $24.65 offered.

After the close, a market source pegged the preferreds at $24.68 bid, $24.74 offered but noted that the market was pre-pricing.

DDR intends to use the proceeds from the new issue together with cash on hand to redeem all of the 7.375% class H cumulative preferreds for $205.5 million, including accrued dividends.

The Hs (NYSE: DDRPH) ended the day at $25.56, up 2 cents.

Wells, Astoria list on NYSE

Wells Fargo's new 5.25% series P class A noncumulative preferreds were admitted to the NYSE on Monday under the ticker symbol "WFCPP."

The issue was among the day's most actively traded securities.

The preferreds were trading at $24.94 at midday, up a penny from the previous close but down from opening levels of $25.05.

A market source meantime saw the paper ending flat at $24.95.

The final NYSE price was in fact $24.95, though that indicated that it was up 2 cents on the day.

Astoria Financial's 6.5% noncumulative preferreds also listed Monday.

The ticker is "AFPC."

The securities were at $24.84 at midday, down 11 cents from the previous close and off 3 cents from the open.

The closing price was $24.82, down 13 cents from Friday.

Texas Capital hits OTC

A trader said Texas Capital Bancshares Inc.'s $150 million of 6.5% series A noncumulative perpetual preferred stock received a temporary trading symbol.

The issue priced Thursday.

The preferreds are trading on a temporary basis on the OTC Markets exchange under the ticker "TCBPP." The securities were among the day's most active.

The preferreds finished the day at $24.82 versus opening levels of $24.65.

Texas Capital is based in Dallas.

Fannie, Freddie firm again

Fannie and Freddie preferreds continued to dominate trading in the secondary space as investors pondered what will happen if larger profits at the government-backed mortgage providers trigger an accounting change.

Fannie's 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up a dime, or 3.17%, at $3.25, while Freddie's 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 17 cents, or 5.5%, to $3.26.

Earlier this month, Fannie said it was delaying filing its 10-K as it attempted to figure out if profits were such that an accounting change would need to be triggered. Under the change, nearly $62 billion of deferred tax assets would be restored to most or all of their value.

In doing so, Fannie's net worth would increase, most of which would go toward repaying the U.S. Treasury.

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