Morning Commentary: Legg Mason selling $25-par notes; Medley in the works; Freddie Mac drifts down

By Stephanie N. Rotondo

Seattle, Aug. 3 – Yet another new issue was added to the preferred stock calendar on Wednesday, with Legg Mason Global Asset Management’s proposed $150 million offering of $25-par junior subordinated notes due 2056.

Price talk is in the 5.625% area, according to a market source.

The issue was quoted at $24.95 bid, par offered in the gray market, a trader said.

Morgan Stanley & Co. LLC, BofA Merrill Lynch, Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC are running the books.

As the market waited for the new issue, Legg Mason’s 6.375% $25-par junior subordinated notes due 2056 (NYSE: LMHA) were trading off 10 cents at $26.89 in early trading.

The market was also still waiting for Medley LLC’s $25 million sale of 25-par unsecured notes due Aug. 15, 2026 to price.

A trader said pricing on that issue would likely come this afternoon.

Among established issues, Freddie Mac’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) were slightly weaker after the mortgage giant reported earnings on Tuesday.

The preferreds were off 3 cents at $4.27 at mid-morning.

For the second quarter, Freddie reported a profit of $993 million – well below the $4.17 billion profit posted a year ago.

Under the government’s 2012 “net worth sweep,” Freddie will pay the entire $993 million back to taxpayers in the form of a dividend payment.

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