Activity low in preferred stock market; Fannie, Freddie ‘very active’; Deutsche Bank down

By Colin Hanner

Chicago, Jan. 17 – Activity was muted in the preferred stock sphere on Tuesday, with a market source saying “not much” was occurring, though the preferred market mirrored the up-then-down fluctuation of the equity market in the early afternoon.

“[Preferred stocks] declined by 1 o’clock in the afternoon, which happened broadly with stocks,” the market source said.

The Wells Fargo Hybrid and Preferred Securities index up 2 basis points, down from its 11-bps gain recorded mid-morning, and the iShares U.S. Preferred index was down 31 bps, a nearly 40 bps downward swing from the plus 7 bps level seen earlier in the day.

Government-sponsored enterprises Fannie Mae and Freddie Mac were “very active,” a market source said.

“There were six issues of Fannie and Freddie that were very active today,” the market source said. “It is what it is – there’s a lot of speculation around them with incoming administration, but there’s been nothing of substance out.”

Of those, Freddie Mac’s 8.375% fixed-to-floating rate noncumulative perpetual preferred stock (NYSE: FMCKJ) was up 1 cent to $7.61.

On Tuesday, the U.S. Department of Justice announced that it had reached a settlement in which Deutsche Bank will pay $7.2 billion related to federal civil claims that the bank misled investors leading up to the most recent financial collapse through mortgage-backed securities, the department reported.

Deutsche Bank Contingent Capital Trust III’s 7.6% trust preferred securities (NYSE: DTK) were off 16 cents to $25.29.

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