Preferred stocks see ‘moderate’ activity; GSE paper active; KeyCorp trades in heavy volume

By Colin Hanner

Chicago, Jan. 4 – Activity was moderate in the preferred stock market on Wednesday, a market source said, with activity reflecting mainly gains on the day.

“I wouldn’t say it’s either light or heavy activity – it’s rather moderate,” a market source said.

The market source said the mostly green activity can be attributed to the new year, or rather what it means for investors with preferred stock on their books.

“The view seems to be that a lot of [activity] seems to be driven by things having been underperforming through tax-off selling,” the market source said.

Tax-off selling occurs in December when people with a stake in a company try to realize losses for tax purposes by selling off the stock, then immediately buying the securities back once the new year starts, the market source said.

“We think that’s what’s going on,” he said. “You would also see that in some of the preferred ETF’s also being up on a dollar-price basis.

On the session, the Wells Fargo Hybrid and Preferred Securities index closed 21 basis points higher. That was lower than the 39 bps it had been up mid-morning.

Government-sponsored enterprises Fannie Mae and Freddie Mac were again among the day’s most active issues.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were down 15 cents, or 0.89%, to $7.78. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were down 10 cents, or 1.30%, at $7.59.

In the rest of the secondary market, KeyCorp’s 6.125% series E non-cumulative fixed-to-floating rate perpetual preferred stock (NYSE: KEYPrI) continued to trade into the afternoon and finished the day up 8 cents, or 0.30%, to $25.53.

Kimco Realty Corp.’s 5.625% class K cumulative redeemable preferred stock (NYSE: KIMPrK) was up 17 cents, or 0.72%, to $23.68.

Goldman Sachs Group, Inc.’s series D floating-rate non-cumulative preferred stock (NYSE: GSPrD) was up 41 cents, or 1.88%, to $22.21.

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