Preferreds gyrate on jobs data, Greece news; JPMorgan to list; Freddie’s earnings miss

By Stephanie N. Rotondo

Phoenix, Feb. 19 – The preferred stock market managed to end modestly higher Thursday after starting the day under pressure.

The Wells Fargo Hybrid and Preferred Securities index finished up 3 basis points. It was down 15 bps at mid-morning.

The initial weakness was attributed to “a jobs number [that] was not as strong as people expected” and Germany’s rejection of Greece’s loan extension request, a trader said.

Initial jobless claims for the week ended Feb. 14 fell 21,000 to 283,000, according to the latest Labor Department report. However, continuing claims rose 58,000 to 2.43 million for the week ended Feb. 7.

As for the ongoing Greek drama, Germany rejected Greece’s request to extend its euro zone loan for six months, during which time the ailing country pledged “fiscal balance.”

However, Germany said the plan was “not a substantial proposal for a solution.”

Of the day’s dealings, Freddie Mac released its fourth-quarter results early in the day, and investors did not seem too pleased that the agency’s profit narrowed year over year.

Meanwhile, JPMorgan Chase & Co.’s $1.38 billion of 6.125% series Y noncumulative preferreds are slated to list on the New York Stock Exchange on Monday, according to a market source.

The deal priced Feb. 5 with $1.2 billion shares sold. A $180 million greenshoe was exercised Feb. 9.

The preferreds’ ticker symbol will be “JPMPF.”

The recent deal was trading at $24.92, up 7 cents.

Freddie earnings disappoint

Freddie Mac reported net income of $227 million for the fourth quarter on Thursday.

That compared to income of $8.6 billion the year before.

“The earnings didn’t hit estimates,” a trader noted.

For all of 2014, net income was $7.7 billion, down from $48.7 billion.

The mortgage giant attributed the substantial difference to losses from investments.

And despite the fact that the government-sponsored entity was planning to make a $900 million dividend payment to the Treasury Department next month – bringing the total amount paid back up to $91.8 billion – the agency’s preferred shares were weakening.

Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were down a dime, or 2.2%, at $4.45. Sister agency Fannie Mae saw its 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) slipping 7 cents to $4.63.

RBS busy

Royal Bank of Scotland Group plc was active but mixed in Thursday trading.

“It was one or two real account specific things,” a market source said.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) ended up 8 cents at $24.58. But the 6.08% noncumulative guaranteed trust preferred securities (NYSE: RBSPG) fell a penny to $24.69.

RBS is an Edinburgh, Scotland-based bank.

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