Preferreds rebound to end session higher; recent issues remain in play; GSEs boosted again

By Stephanie N. Rotondo

Seattle, May 1 – As the first trading session of the month got underway, preferred stocks were edging downward but eventually managed to end with a firm tone.

The broader markets also finished the day higher, which was largely attributed to the fact that Congress had inked a budget deal that would keep the government open through September.

The Wells Fargo Hybrid and Preferred Securities index rose 16 basis points, though it was down 1 bp at mid-morning.

The U.S. iShares Preferred Stock ETF meantime ended 15 bps better, versus the 1 bps decline seen in early dealings.

Among recent deals, NuStar Energy LP’s $350 million of 7.625% series B fixed-to-floating rate cumulative redeemable perpetual preferred units were initially dipping with the market but pushed higher toward the end of the day.

The units finished at $25.38, a gain of 3 cents. They were off a dime at mid-morning, trading at $25.25.

Qwest Corp.’s recent 6.75% $25-par notes due 2057 (NYSE: CTDD) were also being eyed on Monday, as were the 6.5% $25-par notes due 2056 (NYSE: CTBB). The 6.75% paper held steady at $24.95, while the 6.5% notes slipped 3 cents to $24.87.

Meanwhile, it was Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) that saw the bulk of the attention on Monday.

The GSE-linked preferreds improved by 32 cents, or 4.3%, during the session, closing at $7.645.

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