Morning Commentary: Fannie, Freddie mixed on heels of GSE ‘revamp’; Capitala, GasLog active

By Colin Hanner

Chicago, May 12 – Though volume was lacking on Friday morning, government-sponsored enterprises Fannie Mae and Freddie Mac continued to buzz in the preferred stock space.

For the preferred market as a whole, the Wells Fargo Hybrid and Preferred Securities index was flat at mid-morning. The U.S. iShares Preferred Stock ETF was up 8 basis points.

Following a Wall Street Journal report on Thursday that the Senate Banking Committee is attempting to repair the GSE’s, Fannie and Freddie traded higher on Thursday though were mixed on Friday morning.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were down 2 cents, or 0.28%, to $7.08,

Freddie’s 7.625% series R noncumulative preferreds (OTCBB: FNMAJ) were up 25 cents, or 3.92%, to $6.62, while its 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were down 4 cents, or 0.56%, to $6.80.

Mel Watt, head of the Federal Housing Finance Agency, testified at a hearing on housing finance policy on Thursday and said he has the authority to withhold dividends from the GSE’s to the Treasury in order to make sure they remain financially stable.

“People think that’s the first step toward recapitalization and that it might enforce Congress to act on it because that’s been their ATM for the past eight years,” a market source said. “You could see some changes there.”

New issues steady

Capitala Finance Corp.’s $70 million of 6% $25-par notes due 2022 were quoted at $24.90 bid, par offer, a market source said, in line with Thursday morning’s trading levels.

The upsized Capitala deal was seen as a general success in the preferred space, prompting one market source to say: “I expect more [business development companies] to come to market just because of how well the Capitala deal did.”

GasLog Partners LP’s 8.625% series A fixed-to-floating rate cumulative redeemable preference units, under the temporary ticker “GSLGF,” were quoted with a $24.98 bid, $25.10 offer.

A market source said he expects the issue to list next week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.