Fannie Mae-No Politics (FNMA)

[FFFacts]

Is your point that the variable-rate prefs with low current rates could just be ignored when it comes to the share exchange or other treatment of junior pref shareholders?

It makes sense. I prefer to see a conversion at redemption value or better but that would be a recommendation that HL would make.

The fact that many of those series still trade in the vicinity of 16% of par ($8 for the $50s), while the higher-div prefs are around 18-20% of par ($9-10 for the $50s) tells me that the market still sees substantial value in the liquidation preference of the low-yielders.

I wouldn't say that the market sees substantial value. On the extreme you could get about 25% more shares on the low yielding variable preferreds than on the higher yielding fixed rate.

FNMAS and FMCKJ make up a large portion of the total pref face value. While their div rates are technically variable, they have high div rate floors. That plus the 5-year call protection means that holders of those series should expect favorable market pricing (above par), and perhaps favorable treatment in the share exchange too.

Yes they constitute about 13 billion in total redemption values or about 40%. The would likely be treated better or they may not be offered a conversion until a later point.