Fannie Mae, Freddie Mac preferreds actively traded; Deutsche Bank tops secondary market

By Colin Hanner

Chicago, Feb. 7 – Activity in the preferred stock market was light on Tuesday, a market source said, with focus again settling on government-sponsored enterprises Fannie Mae and Freddie Mac as speculation continues to swirl about what will happen to the GSE’s under a new presidency.

“Volume was very, very light,” a market source. “There were no new issues that we heard of. It was a bit on the quiet side.”

The Wells Fargo Hybrid and Preferred Securities index was up 18 basis points at the close of the market, a 19 bps reversal from mid-morning levels.

The iShares U.S. preferred stock index was up 5 bps.

As for the preferred space as a whole, the market source said onlookers are in a standstill.

“People are looking for direction, and nobody really knows,” the source said.

GSE’s mixed

The two most active shares in Fannie and Freddie saw movement in the same direction on the session.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were down 11 cents, or 1.08%, to $10.05.

Freddie’s 5.57% noncumulative preferreds (OTCBB: FMCKM) were down 31 cents, or 3.52%, to $8.50.

“In terms of number of shares, they were the most active,” a market source said.

Not nearly as active were Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ), which were up 5 cents, or 0.52%, to $9.75.

And Fannie’s 8.25% series T noncumulative preferreds (OTCBB: FNMAT) were flat at $10.10.

With Steven Mnuchin yet to be confirmed as the Secretary of the U.S. Treasury Department, and the future of GSE’s resting on decisions that could potentially come out of the Trump administration, the speculation around Fannie and Freddie continue to steer prices, a market source said.

Quiet secondary

“There were only two paying issues that had more than 300,000 shares trade – one was up, one was down,” a market source said of the secondary market on the session.

One of those was a convertible preferred, and the other was Deutsche Bank Contingent Capital Trust III’s 7.6% trust preferreds (NYSE: DTK), which were down 4 cents, or 0.16%, to $25.63.

Another mover was ING Groep NV’s 6.375% perpetual hybrid capital securities (NYSE: ISF), which were up 8 cents, or 0.31%, to $25.58.

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