Preferreds end firm; JPMorgan’s recent deal lists; Fannie, Freddie earnings disappoint

By Stephanie N. Rotondo

Phoenix, Feb. 23 – The preferred stock market was moving higher on Monday, even as the common equity markets were weakening.

The Wells Fargo Hybrid and Preferred Securities index closed up 15 basis points.

While the space was inching higher, a trader noted that overall activity was “quiet.”

“It might be a slow week,” he said, adding that he had yet to hear of any new deals.

Among recent deals, JPMorgan Chase & Co.’s $1.38 billion of 6.125% series Y noncumulative preferreds began trading on the New York Stock Exchange.

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

The preferreds’ ticker symbol is “JPMPF.”

The preferreds ended at $24.97, which a market source said was down a penny from Friday. However, it was up from opening levels of $24.92.

A trader said the paper was trading around $24.98 early in the session. Another market source quoted the issue at $24.94 bid, $24.96 offered.

The preferreds were issued as depositary shares representing a 1/400th interest.

J.P. Morgan Securities LLC was the bookrunner. Joint lead managers were BofA Merrill Lynch, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC.

Proceeds will be used for general corporate purposes.

Fannie, Freddie weaken

Fannie Mae and Freddie Mac preferreds remained under pressure following earnings from the government-sponsored entities last week.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) declined 13 cents, or 2.77%, to $4.57, while Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) lost a dime, or 2.2%, to $4.45.

On Friday, Fannie reported fourth-quarter net income of $1.3 billion, which compared to income of $6.5 billion the year before.

Like its peer Freddie, the narrower loss was attributed to losses on investments based on hedges related to interest rates.

Fannie is also planning to make a $1.9 billion dividend payment to the U.S. Treasury. Once paid, the agency will have paid $136.4 billion in dividends to taxpayers – $20 billion more than the firm received during the financial crisis.

Freddie posted its earnings on Thursday, showing net income for the fourth quarter of $227 million. The GSO said it was planning to make a $900 million dividend payment to the Treasury Department next month – bringing the total amount paid back to $91.8 billion.

Goodrich dives

Goodrich Petroleum Corp. was weaker Monday as oil prices declined and investors prepared for the company’s earnings, which were due out later this week.

The 10% series C cumulative preferreds (NYSE: GDPPC) declined $2.09, or 21.57%, to $7.60, and the 9.75% series D cumulative preferreds (NYSE: GDPPD) dropped “big time,” losing $2.16, or 22.91%, to $7.27.

Some members of the Organization of Petroleum Exporting Countries are expressing concern about falling oil prices and are saying that while certain Middle Eastern members are not worried, others are considering an emergency meeting to discuss how to handle the situation.

The members most concerned about the price drops are Nigeria, Venezuela and Russia.

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