Preferreds falter as plane goes down; Morgan Stanley beats estimates; Fannie, Freddie gain

By Stephanie N. Rotondo

Phoenix, July 17 – Preferred stocks were essentially flat as Thursday trading got underway. Fresh “economic news didn’t do much,” a trader said.

However, after news outlets reported that a Malaysian Airlines plane carrying 295 people went down in the Ukraine, the preferred market tanked along with the broader markets.

How the plane crashed was unclear, as it was reportedly flying in unrestricted airspace, but allegations were flying that it was shot down by pro-Russian separatists.

The Wells Fargo Hybrid and Preferred Securities index closed down 30 basis points.

Continuing the sequence of bank earnings, Morgan Stanley put out its second-quarter results on Thursday. The firm reported a profit nearly double that of the year before, helped out by improved revenue from its wealth management unit.

On the number, Morgan Stanley’s preferreds were mostly better in early trading, but they ended up mixed after the Malaysian Airlines news.

Fannie Mae and Freddie Mac paper were meantime beating the market trend as a new Democrat-sponsored bill outlining what to do with the mortgage guarantors was put on the table.

In new issues, Independent Bank Group Inc. sold $65 million of 5.875% subordinated notes due 2024.

Among recent deals, Wells Fargo & Co.’s $700 million issue of 6% series T class A noncumulative perpetual preferreds got lifted to $800 million. The deal’s greenshoe was exercised, a market source reported.

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