Fannie, Freddie dominate distressed; Arch Coal, other natural resources names again active

By Paul Deckelman

New York, Oct. 1 – The distressed debt market opened the year’s fourth and final quarter on Wednesday with a sharp downside move by the preferred shares and common equity of the two giant government-sponsored enterprises that provide much of the liquidity for mortgage financing in the United States, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp.

The securities of Fannie Mae and Freddie Mac nosedived after a federal judge quashed investor lawsuits that challenged the federal government’s 2012 action sweeping the profits of the two GSEs into the U.S. Treasury.

Elsewhere, traders once again saw fairly busy activity in the bonds of natural resources companies, including such sectors as coal and oil and natural gas.

Among the names seen trading around were coal producers Arch Coal Inc., Alpha Natural Resources Inc. and Cliffs Natural Resources Inc. as well as oilers Samson Investment Co. and Quicksilver Resources Inc.

Traders saw activity – though not much price movement – in Momentive Performance Materials Inc.’s bonds.

Affinon Group’s bonds lost multiple points, although on not much volume, in the wake of big fines and refunds to customers that the federal government is ordering U.S. Bank to pay, totaling $57 million. The fines arose out of problems with identity protection and credit-monitoring services that Affinion was supposed to have provided to those customers.

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