Fannie Mae (FNM) on Monday announced the launch of its five-year benchmark note, the first of its two debt securities to be issued this month.

The size of the deal wasn't announced, but is expected to be $3 billion or more.

Market participants say the focus is on how much of a premium investors would demand to buy the debt security.

"All of the large GSE deals in January came with hefty premiums to the secondary, at least by historical standards for agencies (but certainly not for corporates)," said Jim Vogel, agency strategist with FTN Financial, in a note.

The price talk on the new five-year note is at 93 basis points over comparable Treasurys. This is wider than the existing quote for Freddie Mac's (FRE) five-year note that was trading at around 78 basis points on Monday morning.

It's not clear whether Fannie, like last month, will raise hefty amounts in the debt market with this issue, since it also has another scheduled issuance later this month. In January, Fannie raised $6 billion through a three-year note, and demand from U.S. investors prompted the mortgage company to increase the size of the initial offering.

-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; prabha.natarajan@dowjones.com

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