Morning Commentary: Preferreds soft as week closes; Fannie, Freddie active; Digital Realty lower

By Stephanie N. Rotondo

Seattle, Aug. 4 – The preferred stock market was weak early Friday, even as the broader markets firmed on the back of a strong jobs report.

The Wells Fargo Hybrid and Preferred Securities index was off 3 basis points at mid-morning. The U.S. iShares Preferred Stock ETF was down 18 bps.

Fannie Mae and Freddie Mac’s issues were continuing to trade actively, after both agencies released earnings over the course of the week.

Fannie announced its results on Thursday.

Come Friday trading, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were holding steady at $6.80. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were meantime up a penny at $6.56.

Among the week’s new issues, Digital Realty Trust Inc.’s $200 million offering of 5.25% series J cumulative redeemable preferreds – a deal priced late Wednesday – were seen at $24.67 in early dealings, off 2 cents.

The paper was assigned a temporary trading symbol, “DGGTP,” on Wednesday.

The deal came tighter than the 5.375% price talk and upsized from $100 million.

BofA Merrill Lynch, Citigroup Global Markets Inc. and Wells Fargo Securities LLC ran the books.

And, Public Storage’s $300 million of 5.05% series G cumulative preferreds – a deal priced Monday – were up 9 cents at mid-morning, trading at $24.84.

The issue freed to trade on Tuesday and is trading under a temporary ticker symbol, “PBSTP.”

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