Preferreds firm as rate increase seen put off; UMH talk revealed; Fannie, Freddie gain

By Stephanie N. Rotondo

Phoenix, Oct. 6 – Preferred stocks were rising again in Tuesday trading.

The Wells Fargo Hybrid and Preferred Securities index finished up 12 basis points. The index was up 6 bps at mid-morning.

Chatter continued that the Federal Reserve would push out its interest rate increase, though some have even begun to speculate that another round of quantitative easing may be in order. In either scenario, Morgan Stanley analyst Matthew Hornbach said the strategy would be the same: “get long the belly of the yield curve.”

Despite the positive tone of the market, a source said volume among paying securities was limited. Trading in GSE preferreds, however, was “very active.”

In the primary, UMH Properties Inc. announced a $50 million offering of series B cumulative redeemable preferreds late Monday. Come Tuesday, price talk on the deal emerged in a 7.375% to 7.5% context.

“Good luck with that,” a trader quipped.

Meanwhile, Fannie Mae and Freddie Mac preferreds were “very active because of this conference that was held in Washington,” a market source reported.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) moved up 26.5 cents, or 5.5%, to $5.08, while the 8.25% series T noncumulative preferreds (OTCBB: FNMAT) gained 22 cents, or 3.2%, to close at $7.25.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) improved 36 cents, or 7.56%, to $5.12.

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