BofI preps $25-par notes; Fannie, Freddie react to strategist note; Goldman Sachs higher

By Becky Melvin and Christine Van Dusen

Atlanta, Feb. 25 – The preferred stock market was subdued on Thursday, with recent new issues little-changed to slightly higher, as BofI Holding Inc. prepared a new offering of $25-par 10-year subordinated notes.

The Bank of the Internet represents a new name for the preferred market, a market source said.

Also on Thursday, Fannie Mae and Freddie Mac saw some activity after a BofA Merrill Lynch strategist published a note about the companies. The strategist this week wrote that the government conservatorships that went into effect in 2008 following the housing crisis may be a step closer to ending after the agencies’ lack of capital cushion was flagged by the Federal Housing Finance Agency.

In response, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) closed on Thursday at $3.16, up a penny, on 605,726 shares traded.

The 8.25% series T noncumulative preferreds (OTCBB: FNMAT) finished the day at $4.40, up 14 cents, on 14,913 shares traded.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) closed at $3.20, up 25 cents, on 133,481 shares traded.

Overall, however, “there was not too much happening” in the preferred market, a market source said.

The recently priced Goldman Sachs Group Inc. 6.3% series N noncumulative perpetual preferreds moved up to trade at about $25.22 early on Thursday and later closed at $25.26 on 621,953 shares traded.

W.R. Berkley Corp.’s new $100 million of 5.9% $25-par subordinated debentures due 2056 traded at $24.70, which was a little higher. And eBay Inc.’s $750 million issue of 6% $25-par notes due Feb. 1, 2056 were at $24.80, which was unchanged on the day.

But the eBay paper was expected to move up. “They should slowly tick up from here. It’s a unique security that probably will be put in the S&P index,” a market source said.

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