Preferreds see overall decline, led by Fannie and Freddie; New York Community drops

By Colin Hanner

Chicago, March 21 – The preferred stock market reflected similar declining sentiment as the equity market on Tuesday, a market source said, as most issues trended downward on the day.

The Wells Fargo Hybrid and Preferred Securities index was down 12 basis points, a 10 bps loss since mid-morning.

The U.S. iShares Preferred Stock ETF was down 29 bps after being down 6 bps during the morning session.

A quiet morning turned into an overall poor day for preferreds amid speculation that a health care bill that fails to pass could have implications for tax policy and the budget moving forward.

In the new issue space, Global Indemnity Ltd.’s $120 million of 7.875% $25-par subordinated notes due 2047 – a deal priced Thursday – closed at $24.72, a market source said.

New York Community Bancorp Inc.’s $515 million of 6.375% series A fixed-to-floating rate noncumulative perpetual preferreds – expected to hit the New York Stock Exchange on Wednesday – closed at $25.28, a market source said. A trader quoted the preferreds at $25.90 mid-morning.

The preferreds were trading under the temporary ticker “NYBCP” but will begin trading under the new ticker “NYCBPrA” on Wednesday.

Government-sponsored enterprises Fannie Mae and Freddie Mac were down solidly on the day, particularly Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS), which were down 32 cents, or 4.53%, to $6.74.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were down 29 cents, or 3.99%, to $6.98.

As for the sudden declining surge for the GSEs, a market source said there was “no real substantive news” for why they saw losses, adding it “must be more speculation.”

Elsewhere in the secondary market, Barclays Bank plc’s 8.125% series 5 noncumulative callable dollar preference $25-par preferreds (NYSE: BCSPrD) were down 18 cents, or 0.69%, to $25.81.

Wells Fargo & Co.’s 5.5% series X noncumulative class A preferreds (NYSE: WFCPrX) reversed the overall trend of the market and were up 6 cents, or 0.25%, to $24.25.

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