Preferred stocks firm; Goldman Sachs deal heads higher; Freddie reports improved profit

By Stephanie N. Rotondo

Seattle, Feb. 18 – The preferred stock market was again “bouncing back,” a trader said Thursday.

The Wells Fargo Hybrid and Preferred Securities index put on 33 basis points by the bell. However, the index was only marginally stronger early in the session, rising 1 bp at mid-morning.

Goldman Sachs Group Inc.’s $675 million of 6.3% series N noncumulative perpetual preferreds – a deal priced Tuesday – were moving up nicely, as a trader quoted the paper at $25.15 bid, $25.17 offered. The preferreds closed just south of that range at $25.12, though that was still up 11 cents from midweek trading.

The issue was among the most actively traded of the day, with about 1.53 million preferreds being exchanged.

The deal freed to trade on Wednesday and is already trading with a temporary ticker symbol, “GSHSP.”

Meanwhile, Freddie Mac reported earnings early in the day, showing a larger profit than year-ago comparables.

On the news, the GSE’s 8.375% fixed-to-floating rate noncumulative perpetual preferred stock (OTCBB: FMCKJ) was heading higher, trading up 17 cents, or 5.86%, to $3.07.

Over 1.92 million shares traded during the session.

Peer Fannie Mae also saw its preferreds rising, with the 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) gaining 14 cents, or 4.81%, to close at $3.05.

About 1.95 million of those preferreds changed hands.

For the fourth quarter, Freddie reported a profit of $2.16 billion, which compared to a profit of $227 million the year before.

The mortgage giant attributed the surge in profit to higher credit performance and better derivative bets.

Freddie plans to pay $1.7 billion of said profits to the Treasury, bringing the total given back to taxpayers to more than $98 billion. The agency received more than $71 billion in bailout funding in 2008.

Fannie is slated to release its quarterly results on Friday.

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