Freddie Mac Launches New 2-Year, 10-Year Benchmark Notes
March 25 2009 - 11:55AM
Dow Jones News
Mortgage finance company Freddie Mac (FRE) launched two new
benchmark issues Wednesday.
The company, which canceled a scheduled offering last week, is
back on track with this offering.
Freddie and its sibling Fannie Mae (FNM), which were taken over
by the federal government last September, have raised tens of
billions of dollars in debt over the past couple of months as
investors snap up these securities.
Freddie seems to be well past the days when buyers demanded
higher premiums on debt due to mounting concerns about its capital
and whether the extent of government backing would be enough to
pull the mortgage finance companies through the housing crisis.
Further, the U.S. Federal Reserve said it would buy $100 billion
more of these bonds, in addition to its current $100 billion purse,
by year-end.
This week's issue launched with a price guidance in the area of
72.5 basis points over comparable two-year Treasury yields on the
two-year note, and 100 basis points over comparable 10-year
Treasury yields on the 10-year note.
The deal is expected to price Thursday and settle Friday.
Bank of America Merrill Lynch, Credit Suisse Group (CS) and RBS
Greenwich Capital are the lead managers on the two-year deal.
Citigroup Inc. (C), Barclays PLC (BCS) and JPMorgan Chase & Co.
(JPM) are on the 10-year deal.
Currently, risk premiums on Fannie's 1.75% note due 2011 are
tighter by 1.7 basis points at 66.5 basis points, while Freddie's
4.875% note due 2018 is 4 basis points wider at 84.5 basis points,
according to TradeWeb data.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071;
prabha.natarajan@dowjones.com