Recent issues trade mixed; Validus lists on NYSE; GSE’s lower on hedge fund proposal

By Colin Hanner

Chicago, June 21 – Recent issues in the preferred stock space traded mixed on Wednesday, a market source said while Validus Holdings Ltd.’s most recent issue listed on the New York Stock Exchange.

Preferreds from government-sponsored enterprises were lower on what a market source said was a report about a potential plan for the future of Fannie Mae and Freddie Mac.

The Wells Fargo Hybrid and Preferred Securities index was up 5 basis points. The U.S. iShares Preferred Stock ETF was down 5 bps, a 20-bps downswing from mid-morning.

Among recent issues, Southern California Edison Co.’s SCE Trust VI’s upsized $475 million offering of 5% series L trust preference shares, which freed to trade Tuesday after coming to market on Monday, closed the session off a penny at $24.98 with more than 945,000 shares traded.

Compass Diversified Holdings LLC’s debut preferred issue, $100 million of 7.25% series A preferreds, was up 18 cents, or 0.73%, to $24.85.

“They floated at par, so [that gain] is not so pretty,” a market source said.

Those preferreds traded more than 630,000 times.

Validus Holdings’ $250 million of 5.8% series B noncumulative preference shares, previously trading under temporary ticker symbol “VRRHP” since coming to market on June 13, were listed on the NYSE on Wednesday.

The new ticker is “VRPrB.”

Those preferreds were flat at $25.21 and nearly 480,000 shares traded.

Elsewhere in the secondary arena, Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were down 23 cents, or 3.57%, to $6.22.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were down 10 cents, or 1.67%, to $5.90.

A market source attributed the movement to a Bloomberg report detailing advisory firm Moelis & Co.’s proposal for freeing Fannie and Freddie from government control.

Though the backers of the plan say that it is protecting taxpayers and limiting government’s role, $150 billion from taxpayers may be needed to inject capital into the GSE’s, the story said, “leading one to logically conclude that the plan is not going to go anywhere,” a market source said.

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