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CDS volumes drop, DTCC plans more openness
10/31 12:06 PM
By Karen Brettell and Ciara Linnane
NEW YORK, Oct 31 (Reuters) - Credit derivatives participants have cut outstanding trade volumes while a clearing house said it would release weekly data on the market, as the industry seeks to fend of criticism that it lacks transparency and poses systemic risks.
Outstanding volumes in the market have been cut by $25 trillion in 2008, as banks and investors simplified positions by trimming contracts that offset each other, the International Swaps and Derivatives Association said on Friday.
The settlement of contracts on Fannie Mae (FNM:$0.890400,$-0.099600,-10.06%) , Freddie Mac (FRE:$1.0300,$-0.0900,-8.04%) , Lehman Brothers (LEHMQ:$0.0630,$-0.0030,-4.55%) and others, has also helped reduce volumes, the ISDA, a trade group, said.
Credit default swap, or CDS, volumes have fallen to $46.95 trillion, before accounting for new trades made since July 1.
Meanwhile, the Depository Trust & Clearing Corporation (DTCC), which clears the majority of trades in the CDS market, said it is planning to publish weekly data from the central repository it maintains.
Starting Nov. 4, the DTCC will publish a set of aggregate stock and trade data, which will include notional CDS levels on the 1,000 largest CDS reference entities.
The initiatives come amid fierce criticism of the market, which has been accused of posing systemic dangers to the financial system.
"I think the DTCC plans on greater transparency and the ongoing trade compressions are positives for the CDS market," said Tim Backshall, chief strategist at Credit Derivatives Research in Walnut Creek, California.
CDS are used to hedge against the risk of corporate or other borrowers defaulting on their debt as well as to speculate on a borrower's credit quality.
The New York Federal Reserve said Friday it is hopeful that one or more central counterparties (CCP) for credit derivatives will be operational by November or December of this year.
The lack of a central counterparty poses risks as the private nature of the $55 trillion market makes it impossible to know who is exposed to the dealer or whether they have enough collateral to be repaid what is owed on any trades.
The New York Fed said it it is hopeful a CCP will support a more open trading environment that will include exchange-traded CDS contracts.
"A well-managed CCP for credit default swaps will reduce the systemic risk associated with counterparty credit exposures," the New York Fed said in a statement.
REGULATION EYED
The initiatives come as the market faces almost certain regulation, though what form this may take is unknown.
Industry participants argue that attempts to regulate the market may impede liquidity, which could have unintended consequences such as raising borrowing costs for debt issuers, as it would make hedging debt harder.
"The government's focus on transparency, settlement, and clearing is absolutely correct and is what the CDS market needs," said CDR's Backshall.
"However, marginal efforts at regulation and reserving remain at best worthless and at worst significantly detrimental to the CDS market and implicitly the cost of funding for corporates," he said.
Meanwhile, credit derivative dealers and investors will continue to compress their trading portfolios, which will aid settlement of contracts when defaults occur.
"This reduction in notionals is major progress by anyone's standards," ISDA Chairman Eraj Shirvani, who is also Co-Head of Credit Sales and Trading at Credit Suisse, said in a statement.
"That we have been able to reduce outstanding CDS by more than $25 trillion during this period of immense growth and activity for our products is testament to the will and force behind the industry's efforts to keep operational issues firmly in check," he added.
The so-called notional figures represent activity in the contracts and do not measure the actual amount of credit at risk.
"Notional outstandings are often misunderstood," Robert Pickel, Chief Executive at ISDA, said in the statement.
"While they tend to give an exaggerated impression of amounts at risk, reducing notionals helps both front and back offices. Canceling out economically offsetting transactions reduces the cost and operational workload of managing those transactions," he said. (Reporting by Karen Brettell and Ciara Linnane; editing by Gary Crosse)
CREDIT MARKETS: Signs Of Thaw Reassure Investors
10/30 03:39 PM
NEW YORK (Dow Jones)--There was a visible thaw in credit markets Thursday as commercial paper posted a dramatic surge, and new debt issues from household names hit the investment-grade and high-yield corporate bond markets.
Even the risk premiums on mortgage bonds guaranteed by Fannie Mae (FNM:$0.9612,$0.0612,6.80%) and Freddie Mac (FRE:$1.07,00$0.0300,2.88%) tightened as buyers came back to the market.
The eye-popping number of the day was the $100.5 billion increase in the U.S. commercial paper market, which broke a string of six consecutive weeks of declines.
The Fed's direct lending to U.S. companies through a program that began Monday contributed to the surge in outstanding commercial paper, which had shrunk by $ 366 billion in the weeks following Lehman Brothers' (LEHMQ:$0.0660,$0.0070,11.86%) bankruptcy.
"A bottom in the commercial paper market is in place," said Tony Crescenzi, an analyst with Miller, Tabak & Co. in a note.
Now, issuers have financing into next year. In the past three days, debt maturing in 81 days or more has shot up to a total of $171.28 billion, with $ 62.55 billion borrowed Wednesday alone. Thursday, the Fed posted an effective rate of 2.74% for three-month paper. For asset-backed commercial paper, the rate was set at 3.74%.
Rates in the market have mirrored the Fed's rate, providing a benchmark for investors and companies.
High Yield
MGM Mirage (MGM:$15.0400,$1.2900,9.38%) , faced with disappointing third-quarter results and ongoing capital needs for a major construction project, shopped an issue of five-year senior notes that are secured by an interest in MGM's New York, New York casino property on the Las Vegas strip. The structure lets MGM issue notes that are senior to its existing $13 billion in unsecured debt, according to Moody's Investors Service (MCO:$23.39,00$2.34,0011.12%) , which would presumably allow the company to offer lower yields on the new notes.
The new bonds could be a tough sell at proposed yields.
MGM Mirage's (MGM:$15.0400,$1.2900,9.38%) seven-strong bookrunning group shopped the bonds with a price guidance that includes coupon of 11.75%-12% at a discount to par to yield 14.5%- 15%, according to market participants familiar with the deal. The size of the deal, which was expected to price later Thursday, hasn't yet been determined, but could be up to $1 billion.
By contrast, MGM's 6% notes due 2009 were trading at 90.5 cents on the dollar and yielding 17.75%, according to MarketAxess (MKTX:$5.45,00$-0.06,00-1.09%) , while its 8.5% notes due 2010 were trading at 72 cents on the dollar to yield nearly 29%.
The MGM issue would be the first high yield deal in more than a month. In the meantime, risk premiums on junk bonds have soared to new all-time highs, with average spreads at 1,621 basis points over Treasurys, according to the Merrill Lynch Master II High-Yield Index, making the prospect of new issuance an expensive one.
Investment-Grade Corporate Bonds
Meanwhile, the high-grade corporate bond market saw about $4 billion in new deals. The largest was a $3.25 billion two-part deal from Verizon Communications (VZ:$30.1700,$-0.3300,-1.08%) that was launched at 487.5 basis points over Treasury yields on both the 10- and 30-year parts, according to a person familiar with the deal.
Verizon's (VZ:$30.1700,$-0.3300,-1.08%) existing 30-year 6.9% note due April 2038 traded at a spread of 425 basis points and an existing 10-year 6.1% note due April 2018 traded at a spread of 461 basis points, according to Market Axess.
Agency Debt And Mortgages
Agency mortgage-backed securities were tighter on a choppy, modest volume day. New issues were low, banks were decent buyers, and money managers and leveraged investors were both sellers and buyers.
"There was a lot of activity in swapping up coupon, especially to the 6% coupon, and not outright trades," said Art Frank of Deutche Bank. Pimco's Bill Gross earlier this week noted he would invest in 6% coupons. Risk premiums were 6 basis points tighter to Treasury yields, Frank said.
On the other hand, debt securities issued by Fannie and Freddie couldn't hold on to their gains of the past day and a half. Risk premiums on the two-year notes weakened a lot, with the other longer notes treading into wides as well. Fannie's two-year benchmark issue was 7.5 basis points weaker at 146 basis points, while Freddie 4.875% due 2018 was 1 basis point weaker at 117 basis points, according to Tradeweb data.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; prabha.natarajan@ dowjones.com
(Anusha Shrivastava, Michael Aneiro, Romy Varghese and Kate Haywood contributed to this report.)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=hwMdDGxTiv6DlG9ASYItRw%3D%3D. You can use this link on the day this article is published and the following day.
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10-30-081539ET
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"using" FNM as an unpaid workhorse etc.
I have been waiting for somebody to say something to that effect. I believe when the dust settles, (which it is starting to do), the market will realize that the GOV needed this conservatorship more than FNM needed it.(not speaking for FRE, though I think they will benefit from FNM in the future)
Treasury sales could top $1 trillion to fund bailout
U.S. could also bring back 7-year note, do more frequent sales
10/30 01:50 PM
NEW YORK (MarketWatch) -- Major bond dealers say the United States may have to issue more than $1 trillion in debt during its current fiscal year, by far the most ever, to fund massive programs designed to bail out the banking system.
That would be a "staggering" increase from recent years, said Michael Cloherty, an interest-rate strategist at Bank of America Corp., one of the 17 primary government-security dealers required to bid at Treasury auctions.
The Treasury Department will announce Monday how much of that full-year borrowing it anticipates selling in the first half of the government's 2009 fiscal year, which began this month.
In its past fiscal year ended September, the government sold $724 billion in notes, bonds and inflation-indexed debt, according to Wrightson ICAP, a research firm specializing in government finance.
If the debt issue swells to $1 trillion, as Barclays Capital, Credit Suisse and others anticipate, the issuance would represent a 38% increase in one year.
"This year's financing needs will be unprecedented," the Treasury's acting undersecretary for domestic finance, Anthony Ryan, said Tuesday.
The Treasury gave its last quarterly estimate in July, before the government took conservatorship of mortgage giants Fannie Mae (FNM:$0.9629,$0.0629,6.99%) and Freddie Mac (FRE:$1.10,00$0.0600,5.77%) , and Congress passed a $700 billion package to buy bad assets from financial institutions and inject capital into struggling banks. At that time, it said it expected to borrow $142 billion in this quarter.
Also since that earlier estimate, the Federal Reserve has ramped up its multiple programs designed to ease strains in short-term lending markets by loaning out Treasurys and increasing currency swaps with other central banks so they could loan dollars.
These programs will pressure the Treasury to offer more debt more frequently and by using different types of securities, according to analysts.
One unknown is how much it will have to pay up for all this debt.
A good time to borrow?
So far, the government has been getting a deal when it taps investors because of the credit crisis and anxiety about losses in equities, commodities and global assets. Treasury yields are near multiyear lows as investors have sought the relative safety they offer. The lower yields go, the less the government pays to finance its programs.
"The debt is going into really good hands because everybody is looking for the safest, government-guaranteed paper, given the stock-market turmoil and weak economy," said Alex Li, interest-rate strategist at primary dealer Credit Suisse.
The government's longest-term debt, the 30-year bond , touched an all-time low below 4% in October.
Yields on 2-year notes , the traditional beneficiary of safe-haven bids, remain near the lowest in decades.
Foreign investors, which hold a little more than half of all U.S. debt in the market, have shown no signs of a curbed appetite. They have increased purchases of Treasurys as other forms of debt and equities have been falling.
Current low yields may not last, however. Bond analysts and investors are worried because more issuance tends to mean higher yields, since more supply reduces the value of current holdings.
"We see the tables really turning hard against the Treasury market" as Treasury borrowing rises "meteorically" past $1.5 trillion, said William O'Donnell, U.S. government bond strategist at primary dealer UBS Securities.
Compounding pressures, the Treasury will take out this large tab as an economic slowdown is likely to reduce tax receipts to the government, lowering the amount it has to cover more regular expenses.
Analysts also note that lawmakers are considering another stimulus package of some form, which may add $150 billion to $300 billion to the government's debt load.
Odd denominations could make a comeback
The Treasury is likely to raise cash by expanding its borrowing needs each month at least for this year.
So far, the Treasury has been issuing more bills, the shortest debt vehicle, to deposit at the Fed for it to loan out, but will need to issue longer-term debt as the bills mature.
Increased debt sales are likely to start with November's quarterly sales of 10-year notes and 30-year bonds . Borrowing levels are already near 40-year highs: The Treasury's monthly sales of 2-year and 5-year notes are the biggest since the Treasury began issuing securities regularly in the 1970s.
Primary dealers also expect longer-term debt to be sold more often, such as selling 10-year notes monthly.
The government also may reintroduce other maturities that it stopped selling when the government wasn't running such a big deficit.
Ryan said Tuesday that it may resume selling 3-year notes, last sold in May 2007. The 7-year note also may make a comeback after a 15-year absence, analysts added.
The Treasury already asked its 17 dealers about what timing, sizing and maturities of debt could be best absorbed by the marketplace. That input always goes into how much it sells in its quarterly refunding, which it will announce on Nov. 5.
In a good way.IMO
Posted by: Snappo Date: Thursday, October 30, 2008 8:40:19 AM
In reply to: Snappo who wrote msg# 11257 Post # of 11282
See bold down the page... don't really understand what the consequences would be for shareholders???
Fannie, Freddie Fulfilling Mortgage Mission - Regulator
By Steve Kerch
Fannie Mae (FNM), Freddie Mac (FRE) and the Federal Home Loan Bank Boards are doing "business as usual," their regulator said Wednesday, but it will be some time before normalcy returns to the U.S. mortgage markets because of all the other financial events that have overwhelmed it.
"They are out playing their role, fulfilling their missions," said James Lockhart, director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac in their government conservatorship. "They are buying assets and guaranteeing mortgage-backed securities. And they have plenty of room on their balance sheets now to buy assets that will support those missions."
"It really is business as usual. We are encouraging them now to be more creative," Lockhart told a ballroom crowd at the Urban Land institute fall meeting here. "In this marketplace we really need Fannie and Freddie to provide liquidity and support."
Although the government takeover of Fannie and Freddie, which included for each a $100 billion credit facility with the U.S. Treasury to back its debt, was expected to calm mortgage markets, volatility has been the rule.
"For the first couple of weeks or so what we thought would happen did happen - - mortgage rates came down. Then other, bigger financial issues began to hit and overwhelmed them," Lockhart said. "So many different actions have been taken all around the world...there is just a lot of confusion out there, confusion and fear. It will take time to work its way through."
While both Fannie Mae and Freddie Mac are expected to grow their balance sheets in the coming year in an effort to keep mortgage money flowing in the U.S., the plan is to allow the mortgage giants to shrink again starting in 2010.
"They primarily should be mortgage guarantee companies with portfolios specialized in areas like multifamily," where they are likely to make $50 billion on loan purchases this year, Lockhart said. "But they don't need trillion-dollar balance sheets to do that. This would be done through a natural run-off of their portfolios. They won't have to sell assets."
"If you put something into conservatorship, the idea is to bring them out on the other end. I think next year you'll see that that are profitable again and hopefully they will be able to attract investors again," he said.
The future structure of the two former government-sponsored enterprises is uncertain as Congress will have to decide what it wants after authorizing the federal takeover of the two this summer. Among the options Lockhart says are under consideration are nationalizing the two businesses, completely privatizing them, fragmenting them into a number of smaller companies or reconfiguring them as "stronger, better" GSEs.
"They do have very important missions: providing stability, liquidity and affordability in the mortgage market, both in single-family and multifamily," he said. But the government takeover was necessary because "they were meant to be a countercyclical force and it was clear they weren't going to be" in the current financial crisis, he said. "They were so dependent on investors, particularly foreign investors, that we knew if those investors withdrew we'd have an even more severe credit crunch."
-Steve Kerch; 415-439-6400; AskNewswires@dowjones.com
Fannie Mae Gross Mortgage Portfolio Grows 2.3% In Sept
10/30 09:02 AM
NEW YORK (Dow Jones)--Fannie Mae (FNM:$0.9751,$0.0751,8.34%) increased its net commitments to buy mortgage bonds to $9 billion in September, up from $4 billion in August, according to data reported Thursday.
Fannie's purchase was greater than that of its sibling Freddie Mac (FRE), which last week announced that its commitments to buy mortgage bonds increased $ 2.5 billion in September.
In the same month, the U.S. Treasury bought $5.074 billion of these bonds in an effort to prop up the housing market.
The Federal Housing Finance Agency, the conservator of both Freddie and Fannie, announced it would ask each company to boost its purchase of mortgage bonds to $850 billion. This is expected to lower the rates borrowers pay on their home loans.
Fannie's gross mortgage portfolio increased slightly, by 2.3%, to $761.4 billion from nearly $760 billion in August.
Also, the rapid increase in single-family delinquency rates, as indicated in the report released Thursday, remains troubling.
Fannie's serious delinquency rate rose to 1.57% in August, the latest data available, from 1.45% in July. It was 1.06% in January.
While these numbers are still low, it represents an increased stress on the company from its holdings of Alt-A and other types of mortgages lent to borrowers with risky credit profiles.
Meanwhile, Fannie Mae's (FNM:$0.9751,$0.0751,8.34%) book of business grew at an annualized compound rate of 8% in September, and 8.8% year-to-date.
Total Fannie Mae (FNM:$0.9751,$0.0751,8.34%) issuance of mortgage bonds was at $38.4 billion in September, up from $32.1 billion in August.
Issuance of Fannie Mae (FNM:$0.9751,$0.0751,8.34%) securities and other guarantees rose at a compounded annualized rate of 8.9% during the month.
Fannie's duration gap, a measure of the portfolio's sensitivity to interest rates, averaged plus one month in September, down from two months in August.
Freddie and Fannie are chartered by Congress to buy mortgages from lenders, freeing them to make more loans.
They repackage the mortgages as securities and sell them again. Both also hold on to large quantities of mortgage securities, profiting from the difference between the interest rates they pay and the cost of debt issued to fund their purchases.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; prabha.natarajan@ dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=hwMdDGxTiv6DlG9ASYItRw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
10-30-080902ET
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Fannie Mae Releases September 2008 Monthly Summary
10/30 09:00 AM
WASHINGTON, Oct. 30 /PRNewswire-FirstCall/ -- Fannie Mae's (FNM:$0.9795,$0.0795,8.83%) September 2008 Monthly Summary is now available at http://www.fanniemae.com/ir/monthly. The monthly summary report contains information about Fannie Mae's (FNM:$0.9795,$0.0795,8.83%) monthly and year-to-date activities for our gross mortgage portfolio, mortgage-backed securities and other guarantees, interest rate risk measures, and serious delinquency rates.
For more information, please contact Investor Relations at (202) 752-7115 or email investor_relations1@fanniemae.com. Shareholder information about Fannie Mae (FNM:$0.9795,$0.0795,8.83%) is also available 24 hours a day through our transfer agent toll free at 1-800-FNM-2-YOU (1-800-366-2968).
Fannie Mae (FNM:$0.9795,$0.0795,8.83%) exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae (FNM:$0.9795,$0.0795,8.83%) has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. In 2008, we mark our 70th year of service to America's housing market. Our job is to help those who house America.
SOURCE Fannie Mae (FNM:$0.9795,$0.0795,8.83%)
Ex-Fannie Mae chief wishes he said "no" more often-WSJ
10/30 01:05 AM
Oct 30 (Reuters) - Former Fannie Mae <FNM.N> Chief Executive Daniel Mudd wished he said "no" to more of the things the company was asked to do, he told the Wall Street Journal in an interview.
"We were asked -- or required -- to expand lending, to conserve capital while providing liquidity, to meet housing goals for the underserved, to serve shareholders and homeowners alike," Mudd told the paper.
"I should have gone to the government and gotten a clear answer to the question: What do you want -- more capital or more lending?" Mudd said.
He told the paper that one option for Fannie Mae (FNM:$1.00,00$0.1000,11.11%) and Freddie Mac (FRE:$1.1501,$0.1101,10.59%) would be to privatize them.
"This would mean two things: eliminating their 'government sponsorship' and the requirement that they invest only in housing, Mudd said. "Fannie and Freddie would diversify, and operate like other highly regulated financial institutions."
He suggested that the government could alternatively become the sole owner-operator by buying the outstanding stock of the companies and placing them under a full guarantee.
The U.S. government took over the two mortgage giants in September as the global financial crisis deepened and replaced their management as part of a plan to recapitalize the two firms.
A U.S. Congress committee said last week that it would examine the financial collapse and federal takeover of the companies on Nov. 20, after the U.S. presidential and congressional elections. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Kim Coghill)
Trade Freddie, Buy Fannie. IMO.
A famous general once said a happy soldier is a bitchin' soldier. It's when they aint bitchin' that you gotta worry...
I think the OS is somewhat misleading with these two. FRE volume is higher, but the number of shares trading may be larger with FRE even though it has a smaller OS than FNM. FRE's largest holder (LeggMason?) sold off all it's shares this past month. FNM's largest holder sold, but only sold off less han a third of its holdings. The other large holders may have chosen different tactics, but I am sure you all get my point. Just a thought.
You just did, LOL...
FANNIE EYES $20.6B WRITE OFF
Fannie Mae (FNM:$0.9299,$0.1399,17.71%) says it will write down the amount of deferred tax assets on its books as part of the mortgage company's 3Q report, potentially erasing all $20.6 billion the company had available to offset taxes on future profit. Shares up 8% .
Fannie Mae to write down key capital component/b]
10/29 10:37 AM
NEW YORK, Oct 29 (Reuters) - Fannie Mae (FNM:$0.9201,$0.1301,16.47%) , the largest provider of funding for U.S. home mortgages, on Wednesday said it will likely write down "substantially all" of a tax-related asset that has been a key component of capital.
Companies can use deferred tax assets as a way to offset future taxes, but must be able to show they will be profitable.
Accounting for deferred tax assets became controversial for Fannie Mae (FNM:$0.9201,$0.1301,16.47%) after the company posted a string of surprising quarterly losses, which hamstrung its ability to raise capital to offset losses from rising foreclosures. Capital concerns at Fannie Mae (FNM:$0.9201,$0.1301,16.47%) and rival Freddie Mac eventually led to their seizure by the U.S. government in September.
Fannie Mae's (FNM:$0.9201,$0.1301,16.47%) deferred tax assets totaled $20.6 billion as of June 30. One analyst said the amount is likely to be larger for the third quarter.
Treatment of the assets is a focus of class-action lawsuits filed against Fannie Mae (FNM:$0.9201,$0.1301,16.47%) that charge the company was concealing its capital deficiency. (Reporting by Al Yoon; Editing by Andrea Ricci)
Centerline Cap Group Closes $131M Loan Package With Fannie Mae
10/29 10:30 AM
(MORE TO FOLLOW) Dow Jones Newswires (201-938-5400)
10-29-081030ET
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Number Of CP Issues For 81+ Days 954 Vs 1,511 Mon - Fed
10/29 09:59 AM
NEW YORK (Dow Jones)--For the second day running, commercial paper borrowing for debt maturing past 81 days showed an increase Tuesday, though the pace slowed from Monday, according to data released by the U.S. Federal Reserve on Wednesday.
On Tuesday, companies borrowed $41.6 billion versus $67.1 billion on Monday, the first day that the Fed's backstop facility to tide over companies unable to get debt maturing past just a few days became operational.
The asset-backed segment comprised $14.8 billion of the borrowing, versus $ 27.68 billion on Monday.
"The facility has given a boost to this market," said a trader at a primary dealer, who said the flurry continued Wednesday morning. "If it continues for a week, we can say the program has had a solid impact in the market."
He has processed orders for a little over $5 billion so far. Of this, 40% is for debt that matures in 30 days or more.
Companies rely on the commercial paper market to fund their everyday needs like paying employees and landlords and for rent and supplies.
The number of issues that came to market Tuesday fell to 954 from 1,511 on Monday. On Friday, that number was 623.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=nmC%2FAKYmgJGLUOTz%2FlV6rA%3D%3D. You can use this link on the day this article is published and the following day.
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Fannie Mae sells $2 bln bills at lower rates
10/29 09:52 AM
NEW YORK, Oct 29 (Reuters) - Fannie Mae (FNM:$0.930400,$0.140400,17.77%) <FNM.P> on Wednesday sold $2 billion in bills at lower interest rates compared with sales of the same maturities a week ago.
Fannie Mae (FNM:$0.930400,$0.140400,17.77%) said it sold $1 billion of three-month benchmark bills due Jan. 28, 2009 at a stop-out rate, or lowest accepted rate, of 2.190 percent and $1 billion of six-month bills due April 29, 2009 at a 2.800 percent stop-out rate.
The three-month bills were priced at 99.446 and have a money market yield of 2.202 percent, and the six-month bills were priced at 98.584 and have a money market yield of 2.840 percent, according to Fannie Mae (FNM:$0.930400,$0.140400,17.77%) .
On Oct. 22, Fannie Mae (FNM:$0.930400,$0.140400,17.77%) sold $1 billion of three-month bills at a 2.200 percent stop-out rate and $1 billion of six-month bills at a 2.930 percent stop-out rate.
Settlement for the new bills is Oct. 29-30. (Reporting by Caryn Trokie; Editing by James Dalgleish)
You can just see the possibilities!
More Signs Of Healing In Short-Term Corporate Lending
10/28 02:22 PM
NEW YORK(Dow Jones)--Preliminary indications show that the Federal Reserve's new program to ease short-term lending conditions for U.S. companies is working.
Fresh data from the Federal Reserve showed that companies raising funds for more than 81 days in the commercial paper market soared Monday, while on Tuesday more borrowers posted three-month rates they were willing to pay investors in the open market, using the central bank rates as their benchmark.
The Fed's program, the Commercial Paper Funding Facility, is aimed at unclogging short-term funding markets by providing a safety net for highly-rated companies looking to raise three-month funding for their day-to-day needs like rent and supplies.
For weeks, companies had struggled to obtain funds for more than one day, but that changed Monday when the Fed's program became operational.
The total amount borrowed for debt maturing in 81 days or more shot up to $67 billion from $7.36 billion Friday and just $3.6 billion Thursday, according to Fed data released Tuesday.
The data doesn't specify who did the lending, but market participants suspect that the central bank bought the bulk of longer-term commercial paper sold by companies on Monday.
The Fed will release weekly data detailing the amount tapped from its newly launched facility on Thursdays.
"Presumably most of it was due to the CPFF," said Ira Jersey, interest rate strategist at Credit Suisse (CS:$31.55,00$-0.55,00-1.71%) . "If you look back at issuance trends, that is what it looks like because on most days, issuance has not been more than $10 billion."
The asset-backed segment comprised a substantial chunk of Monday's longer-term borrowing at $27.7 billion, up from $2.5 billion Friday.
"It's a good sign that issuers are using the facility and that they were able to finance over the year's end," said one trader at a primary dealer. "This program was needed to unclog this system."
The number of issues that came to the market Monday was 1,511 compared with 623 Friday.
The total outstanding for debt maturing in one to four days on Monday stood at $132 billion versus $128 billion Friday. Total borrowing Monday stood at $232 billion, versus $160 billion on Friday.
Companies like General Electric (GE:$18.2911,$0.5611,3.16%) and American Express (AXP:$23.7488,$0.6688,2.90%) have said they have signed up for the program.
While GE has said it tapped the Fed's facility on Monday, spokesman Russell Wilkerson declined to disclose the amount. "We'll assess our needs and access the facility as appropriate," Wilkerson said. "We believe the facility is good for the market and for our investors and for us."
A spokeswoman for American Express (AXP:$23.7488,$0.6688,2.90%) said the company "intends to use the facility" but it hasn't decided when it will do so or for how much.
Fed's Rate Serves As Benchmark
A second indicator that the Fed's program is having an impact in the market is that on Tuesday, rates offered in the commercial paper market for three-month debt are hovering around what the Fed is offering companies looking to borrow from the bank.
This indicates the Fed's rate is serving as a benchmark for the $1.45 trillion commercial paper market. Issuers offering rates higher than the Fed's rate are doing so to incentivize investors to buy their debt so the companies don't have to turn to the Fed without first dealing directly with investors.
Some issuers are matching the Fed's effective rate of 2.89%, while others are offering slightly higher rates in the effort to increase their investor base.
Issuers who are offering rates up to 3.05% Tuesday are probably making a " conscious business decision to grow the investor base because companies can't keep using the Fed as a crutch," said Kevin Giddis, head of fixed income at Morgan Keegan in Memphis, Tenn. "It is better to engage the investor."
In the asset-backed segment, higher-rated issuers are offering rates slightly lower than the Fed rate of 3.89%, but the lower-rated companies are posting rates around 4%, the trader said.
The volume of trading is also slightly higher than it was on Monday, market participants said.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@ dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=h4DiqbZI5m8YiTabAal5Ag%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
10-28-081422ET
Copyright (c) 2008 Dow Jones & Company, Inc.
I may be wrong on the specific number, but I am pretty sure that "combined $6T" in assets everyone talks about is about 70% Fannie.
History says Fannie trades higher. Give it time. You will be glad if you are longer than most, IMO.
Goodness gracious...
Fannie Mae to Reinstate Homebuyer Education and Counseling
10/28 11:51 AM
WASHINGTON, Oct. 28 /PRNewswire-FirstCall/ -- Fannie Mae (FNM:$0.7479,$0.067900,9.99%) today announced that it will reinstate a requirement for homeownership counseling and education for first-time homebuyers obtaining a MyCommunityMortgage(R) loan or a loan that relies on nontraditional credit to qualify. Effective January 1, 2009, the requirement is geared toward helping borrowers better assess their options and responsibilities both before and after they purchase a home.
"High quality counseling provides the first-time homebuyer in particular with reliable information and the resources necessary to make the kind of informed decisions that ultimately lead to sustainable homeownership," said Herb Allison, President and CEO, Fannie Mae (FNM:$0.7479,$0.067900,9.99%) . "In this extraordinary market, we think it is critical to reinstate this requirement and to work with counseling agencies and our lender partners to help homeowners succeed."
All required borrower counseling will be provided according to the National Industry Standards for Homeownership Education and Counseling, or those of comparable quality as established by other organizations. The National Industry Standards for Homeownership Education and Counseling were developed by a national advisory council of industry stakeholders, including Fannie Mae (FNM:$0.7479,$0.067900,9.99%) , and spearheaded by the NeighborWorks(R) Center for Homeownership Education and Counseling. Fannie Mae (FNM:$0.7479,$0.067900,9.99%) has long promoted and supported the development of industry-wide standards to ensure high quality and consistent pre- and post-purchase homebuyer education.
"Too often, homebuyers arrive at the settlement table without a full understanding of the terms and conditions of their loan or the overall responsibilities of homeownership. Educated buyers are able to make better choices to achieve sustainable homeownership," said Ken Wade, CEO, NeighborWorks. "Now, more than ever, the housing industry recognizes the need to ensure high quality education, and counseling is a key step on the path to homeownership, particularly for new homebuyers. We applaud Fannie Mae (FNM:$0.7479,$0.067900,9.99%) for taking this step."
"Certified housing counselors are experts on the process of planning for buying a home, and keeping that home once you're there," said Susan C. Keating, President and CEO, National Foundation for Credit Counseling, whose 1,630 certified housing counselors offer pre-purchase counseling in 847 locations across the country. "We're pleased to be working with Fannie Mae (FNM:$0.7479,$0.067900,9.99%) in supporting the effort to ensure that Americans embarking upon the long journey to homeownership do so as prepared as possible."
Consumer Credit Counseling Service (CCCS) of Greater Atlanta, a HUD-certified housing counseling agency, provides pre-purchase housing counseling for consumers at 18 offices in four Southeastern states. Prospective homeowners learn about the home-buying process, as well as the costs involved in the care and maintenance of a home. "Any person who receives pre-purchase housing counseling understands the financial obligations involved in homeownership and learns how to budget their income to pay for all of these obligations," said Michelle Jones, Vice President of counseling for CCCS of Greater Atlanta.
Fannie Mae (FNM:$0.7479,$0.067900,9.99%) will continue to encourage face-to-face education and counseling, with some flexibility for telephone counseling to accommodate borrowers who are unable to attend face-to-face sessions or who do not have an eligible provider in their area. The counseling curriculum, provided prior to closing by an independent and certified third party agency or counselor, will cover a variety of topics including: readiness for homeownership; budgeting and credit; selecting a home; obtaining a mortgage; and maintaining a home. In addition, homebuyers will receive a personalized assessment of their financial position and readiness for homeownership, and an analysis of their credit history and current financial situation.
"Housing counseling gives sound mind in the home buying process. Financial education is essential to making prudent money-making decisions," said Rev. Elmira Smith-Vincent, President and CEO of the Flint, Michigan-based Mission of Peace which provides counseling to individuals and families.
MyCommunityMortgage provides lenders a conforming alternative for low- and moderate-income borrowers and provides options that can help lenders serve communities and provide financing options to teachers, police officers, firefighters, health care workers, eligible military personnel and people with disabilities.
"At Citi, we believe homeownership plays an important role in improving people's lives and strengthening communities. For many people, access to quality first time homeownership counseling is key to owning and keeping a home," said Sanjiv Das, CEO, CitiMortgage. "This year, Citi's Office of Financial Education celebrated the fourth anniversary of our unprecedented 10-year, $200 million global commitment to Financial Education," he added.
"An informed homebuyer is an empowered homebuyer and we commend all efforts to enhance consumer education requirements," said Cara Heiden, Co-President, Wells Fargo Home Mortgage. "Homeowners succeed financially only when they fully understand their financial options and available mortgage options. Wells Fargo has a long-standing commitment to offering a variety of homebuyer education opportunities and our experience demonstrates consumers are less likely to need future assistance if they enter the loan origination process with a strong knowledge base."
For borrowers purchasing a two-to-four-unit property under the MyCommunityMortgage product, Fannie Mae (FNM:$0.7479,$0.067900,9.99%) will continue to require pre-purchase education and counseling, as well as landlord counseling in accordance with its Becoming a Landlord education curriculum or a program with similar content: https://www.efanniemae.com/lc/publications/pdf/landlord.pdf. In addition, post-purchase, early delinquency counseling continues to be required for all borrowers obtaining a MyCommunityMortgage loan, regardless of property type. Read the Fannie Mae Selling Guide for details: https://www.efanniemae.com/sf/guides/index.jsp.
For more information, see announcement 08-25, Homebuyer Education and Counseling, on efanniemae.com and the "Find a Counselor" search at https://www.efanniemae.com/is/hcounselors/index.jsp?from=hp.
Consumer Credit Counseling Service of Greater Atlanta is a 501(c)3 nonprofit community-service agency that provides confidential budget counseling, money management education, debt management programs, bankruptcy counseling and education, and comprehensive housing counseling. The agency served more than 400,000 consumers in 2007, primarily from low- and moderate-income households, in all 50 states.
Consumers can speak to counselors in English and Spanish 24 hours a day, 365 days a year, by phone at 1-800-251-CCCS, and also access the agency's web sites, www.cccsinc.org and www.cccsenespanol.org where live-chat counselors are available around the clock.
Mission of Peace is a faith-based, non-profit organization based in Flint, Michigan, that provides homeownership counseling to individuals and families. Mission of Peace National Corporation is a United States Department of Housing and Urban Development (HUD) National Housing Counseling Agency with an affiliate network of housing counseling agencies throughout the United States of America.
The National Foundation for Credit Counseling (NFCC), founded in 1951, is the nation's largest and longest serving national nonprofit credit counseling organization. The NFCC's mission is to promote the national agenda for financially responsible behavior and build capacity for its members to deliver the highest quality financial education and counseling services. NFCC members annually help more than two million consumers through close to 900 community-based offices nationwide. For free and affordable confidential advice through a reputable NFCC member, call 1-800-388-2227, (en Espanol 1-800-682-9832) or visit www.nfcc.org.
NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. To date, we have assisted nearly 850,000 low- to moderate-income families with their housing needs. Much of our success is achieved through our support of the NeighborWorks network -- more than 230 community development organizations working in 4,400 urban, suburban and rural communities in all 50 states, the District of Columbia and Puerto Rico. In the last five years, NeighborWorks organizations have generated more than $12.4 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.
Organizations providing homeownership education can endorse and adopt the National Industry Standards for Homeownership Education and Counseling, or integrate the recommended benchmarks into their business operations. For more information, visit the Center for Homeownership Education and Counseling (http://www.homeownershipstandards.com).
Citi, the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi's major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.
Wells Fargo Home Mortgage is one of the nation's leading retail mortgage lenders and servicers of home mortgages. As a division of Wells Fargo Bank, N.A., it has a local presence in more than 2,400 mortgage stores and bank branches, plus the capabilities to serve the home financing needs of customers nationwide through its call centers, Internet presence and wholesale lending operations. Wells Fargo Home Mortgage services loans for more than 8 million servicing customers.
Fannie Mae (FNM:$0.7479,$0.067900,9.99%) exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae (FNM:$0.7479,$0.067900,9.99%) has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to homebuyers. In 2008, we mark our 70th year of service to America's housing market. Our job is to help those who house America.
MyCommunityMortgage is a registered mark of Fannie Mae (FNM:$0.7479,$0.067900,9.99%) . Unauthorized use of this mark is prohibited.
SOURCE Fannie Mae (FNM:$0.7479,$0.067900,9.99%)
Posted by: Markss40 Date: Saturday, October 25, 2008 9:13:28 AM
In reply to: None Post # of 10154
NEW YORK—Wall Street investors experienced a sudden surge in optimism Tuesday when, after six tumultuous weeks that saw record drops in the Dow Jones industrial average, a $1 bill was spotted on the floor of the New York Stock Exchange.
The dollar bill was discovered in the northwest corner of the trading floor at approximately 12:05 p.m., and its condition was reported as "crinkled, but real." Word of the tangible denomination of U.S. currency spread quickly across the NYSE, sending traders into a frenzied rush of shouting, arm-flailing, hooting, hollering, and, according to eyewitnesses, at least one dog pile.
"With credit frozen and the commercial paper market poised on the brink of collapse, this is the most promising development I've seen on Wall Street in months," said floor trader Tim Formato, one of hundreds who gathered around the $1 bill and excitedly called their clients to inform them that they were looking at actual U.S. tender. "I think I touched it."
According to witnesses, the trading floor was soon abuzz with energy, as traders pointed at the dollar and repeatedly shouted "Look!" and "Money!" A proposal to divide the $1 note into 1,300 equal pieces and distribute them amongst investors was considered, but ultimately rejected. Early reports estimate the dollar may have passed through as many as 65 hands before disappearing in the late afternoon.
The bill's absence, however, did not deter the growing enthusiasm from those on the trading floor. By 2:15 p.m., more than 60,000 shares had been purchased in the new publicly traded asset, DLR, after brokers placed a flurry of calls advising their investors to buy into the booming single-dollar market.
By the close of day, economists were estimating the dollar bill's net worth at just under $270 million.
"We couldn't be in a better situation right now," trader Patrick Kady said. "Unless of course it had been a euro."
However, some financial advisers are warning against the rampant speculation the dollar has caused on Wall Street. Many have cautioned investors not to make rash decisions, such as liquidating all their low-risk government bonds in order to sniff the green paper bill for just a minute.
"I bet it smells like rose petals," mutual funds specialist Ken Stoute said. "My friend's friend Tim Formato? He's on the board at Westminster Securities and he says he touched it. He said it was warm and soft and wonderful. He said he knows where it is now, and I can put in an option on seeing it tomorrow for only $85."
Since the appearance of the dollar, the Dow has spiked an impressive 993 points—its largest gain ever. Initial numbers are showing the most sizable rises in technology stocks, a trend some are attributing to Microsoft's CFO Chris Liddell, who toured the trading floor Tuesday morning with the bill stuck to his left shoe.
The overall projection for the market following the incident has been positive, with many analysts claiming that the $1 bill may be an indication of other spare change lying around. This, coupled with reports out of Europe that there is a German college student who has not yet hit her credit card limit this month, could be enough to stabilize the Dow and jump-start the global economy once again.
"This is just another sign that the U.S. economy is as strong and resilient as it has ever been," said Richard Fuld Jr., former CEO of Lehman Brothers. "I'm just glad we finally have these credit and subprime mortgage loan crises behind us. This $1 bill will carry us through another 10 years of reckless, unregulated borrowing."
Risk Premiums On Fannie, Freddie Debt Tighten Rapidly
10/23 11:47 AM
By Prabha Natarajan
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Risk premiums on debt securities issued by mortgage giants Fannie Mae (FNM:$0.7502,$-0.0352,-4.48%) and Freddie Mac (FRE:$0.807700,$-0.022200,-2.68%) received a strong boost Thursday after their regulator reaffirmed that this debt is explicitly guaranteed by the U.S. government.
"The conservatorship and the access to credit from the U.S. Treasury provide an explicit guarantee to existing and future debt holders of Fannie Mae (FNM:$0.7502,$-0.0352,-4.48%) and Freddie Mac (FRE:$0.807700,$-0.022200,-2.68%) ," said James Lockhart, chairman of the firms' regulator, the Federal Housing Finance Agency, at a Senate Banking committee hearing Thursday.
That was music to bondholders ears, who have been concerned about the lack of an explicit guarantee from government officials. And despite Lockhart's assurances, some investors were still doubtful, suggesting the gains seen Thursday may be hard to build on. The two mortgage finance agencies were nationalized by the U.S. government in early September.
"It's the first time we've heard the term explicit guarantee in a public testimony, and the market is reacting to it," said Margaret Kerins, head of agency strategy at RBS Greenwich Capital. "There's clearly better buying across the board," she said.
Risk premiums or spreads on Fannie and Freddie debt securities tightened sharply over comparative Treasury yields as a result. Fannie's two-year benchmark note was 6.8 basis points tighter at 133 basis points over comparative Treasury yields. The Freddie 10-year note was 7.5 basis points tighter at 87.5 basis points over comparative Treasury yields midday, according to data provider TradeWeb.
That marks a turnaround from the selling that has taken place since last week, which pushed risk premiums on agency debt to historic wide levels. That made it costlier for these firms to raise fresh debt in the market at a time when they are being tasked with supporting the ailing mortgage market.
Investors feared agency debt may not carry the full backing of the U.S. government. This stands in sharp contrast to the explicit guarantee offered by the Federal Deposit Insurance Corp. for new bank debt.
The clamoring for clarity on whether such a guarantee exists prompted Lockhart to state that the debt carries explicit government backing at a testimony Thursday.
Despite the market's strong initial response, investors remain doubtful. Many market participants give little weight to Lockhart's comments, seeing them as an attempt to shore up investor confidence and calm the market.
"Until you see a legal document from the U.S. government that directly contravenes the outstanding legal document on Sept. 7 (that outlined the takeover of Fannie and Freddie) that explicitly denies there is any guarantee whatsoever, you must not believe what Lockhart says," said Jim Vogel, an agency strategist at FTN Financial.
Some participants also question whether Lockhart has the power to guarantee debt on the two mortgage finance giants.
Another point to ponder, RBS's Kerins said, is the recommendation by regulators to lower the risk weighting on Fannie and Freddie debt to 10% from 20% for banks holding these securities.
"The question remains that if it is government guaranteed shouldn't the risk be zero?" she asked.
-By Prabha Natarajan, Dow Jones Newswires, 201-938-5071; prabha.natarajan@ dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=oxUE9cWkb7%2Br3Ccb87Xjhw%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
10-23-081147ET
Copyright (c) 2008 Dow Jones & Company, Inc.
How is that in any way relevant to this stock?
...-- Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) will state the specific maturity and size of the offerings on
announcement dates. Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) also may opt to skip issuance....
U.S. agency 2008 note sales calendar
10/22 02:06 PM
Oct 22 (Reuters) - The following are the sales schedules for Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%)
benchmark notes and Freddie Mac (FRE:$0.8421,$-0.0779,-8.47%) reference notes in 2008.
Debt issued by the Federal Home Loan Banks is not sold based on a preset
calendar, and offerings will be added as they are announced.
In addition to these offerings, Freddie Mac (FRE:$0.8421,$-0.0779,-8.47%) and Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) sell bills each
week [N07164318].
*Issue has been priced
AGENCY TYPE OF DEBT AMOUNT ANNOUNCEMENT/PRICING SETTLEMENT
NOVEMBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Nov 4/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Nov 17/NA NA
DECEMBER:
Freddie Mac 2-,3-, 5-, 10-yr notes NA Dec 1/NA NA
Fannie Mae 2-,3-, 5-, 10-yr notes NA Dec 8/NA NA
-- Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) will state the specific maturity and size of the offerings on
announcement dates. Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) also may opt to skip issuance.
-- The minimum issue size for new Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) 2-, 3-, 5- 10-year notes is $3
billion. Fannie Mae (FNM:$0.80,00$-0.10,00-11.11%) said benchmark note sales are expected to price within 3
business days of the announcement date and will generally settle 2 business
days after the pricing of the issue.
-- Freddie Mac (FRE:$0.8421,$-0.0779,-8.47%) will state the specific maturity and size of the offerings on
announcement dates.
-- The minimum size for Freddie Mac (FRE:$0.8421,$-0.0779,-8.47%) new 2-yr, 3-yr, 5-yr and 10-year note
offerings is $3 billion. There is no minimum size for a reopening. The minimum
size of new REMIC offerings is $1 billion.
NA = Announcement or settlement dates are unavailable.
Fannie Mae, Freddie Mac bill sale calendar
10/22 02:06 PM
Oct 22 (Reuters) - The following is a list of scheduled U.S. agency bill
sales from Fannie Mae (FNM:$0.8001,$-0.0999,-11.10%) and Freddie Mac (FRE:$0.8400,$-0.0800,-8.70%) for 2008. Freddie Mac (FRE:$0.8400,$-0.0800,-8.70%) settlement dates
for its bill sales will be available the day those offerings are announced.
*=Bills have been priced
AGENCY TYPE OF BILLS ANNOUNCEMENT PRICING SETTLEMENT
OCTOBER ISSUES:
*Fannie Mae 3-month/6-month Oct 20 Oct 22 Oct 22-23
Freddie Mac 3-month/6-month Oct 24 Oct 27 NA
Freddie Mac 1-month Oct 24 Oct 29 NA
Fannie Mae 3-month/6-month Oct 27 Oct 29 NA
Fannie Mae 1-year NA NA NA
NOVEMBER ISSUES:
Freddie Mac 3-month/6-month Oct 31 Nov 3 NA
Fannie Mae 3-month/6-month Nov 3 Nov 5 NA
Freddie Mac 3-month/6-month/12-month Nov 7 Nov 10 NA
Fannie Mae 3-month/6-month Nov 10 Nov 12 NA
Freddie Mac 3-month/6-month Nov 14 Nov 17 NA
Fannie Mae 3-month/6-month Nov 17 Nov 19 NA
Freddie Mac 3-month/6-month Nov 21 Nov 24 NA
Freddie Mac 1-month Nov 21 Nov 26 NA
Fannie Mae 3-month/6-month Nov 24 Nov 26 NA
Fannie Mae 1-year NA NA NA
DECEMBER ISSUES:
Freddie Mac 3-month/6-month Nov 28 Dec 1 NA
Fannie Mae 3-month/6-month Dec 1 Dec 3 NA
Freddie Mac 3-month/6-month/12-month Dec 5 Dec 8 NA
Fannie Mae 3-month/6-month Dec 8 Dec 10 NA
Freddie Mac 3-month/6-month Dec 12 Dec 15 NA
Fannie Mae 3-month/6-month Dec 15 Dec 17 NA
Freddie Mac 3-month/6-month Dec 19 Dec 22 NA
Fannie Mae 3-month/6-month Dec 22 Dec 24 NA
Freddie Mac 3-month/6-month Dec 26 Dec 29 NA
Freddie Mac 1-month Dec 26 Dec 31 NA
Fannie Mae 3-month/6-month Dec 29 Dec 31 NA
Fannie Mae 1-year NA NA NA
Footnotes:
--The minimum issue size for Fannie Mae (FNM:$0.8001,$-0.0999,-11.10%) benchmark and Freddie Mac (FRE:$0.8400,$-0.0800,-8.70%) reference
bills is $1 billion.
--Freddie Mac (FRE:$0.8400,$-0.0800,-8.70%) will issue 3-month, 6-month and 12-month bills in 2007 and
2008. Announcements will be made on Fridays with pricing on Mondays, unless
there is a holiday in which case pricing will be on Tuesdays.
After spike, mortgage rates look set to soften
Economic woes, reaction to F.D.I.C.'s bank bailout have kept rates high
10/22 01:23 PM
SAN FRANCISCO (MarketWatch) -- As investors cautiously catalogue signs that credit is starting to thaw, one important part of the debt market - mortgages - is taking a longer time emerging from deep freeze, pushing off a global financial recovery.
Still, there are some fresh signs from banks and the market for mortgage securities that home-borrowing costs may retreat soon, thanks to falling global interest rates and the government's plans to buy bad loans from banks.
"Everyone is hoping that this latest jump in mortgage rates and current level of mortgage spreads is temporary," said Nancy Vanden Houten, an economist with Stone & McCarthy Research Associates.
A survey of 170 mortgage originators conducted by HSH Associates and released on Tuesday showed lenders lowered the average rate of a 30-year fixed-rate mortgage to 6.16%, more than a half-point lower than last Wednesday's 6.75% but still higher than in early September when U.S. government moved to shore up the mortgage market by taking over Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) and Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) .
The HSH survey often foreshadows a more widely followed survey of lenders published by Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) every Thursday for the prior seven days.
Last week, Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) reported average mortgage rates spiked more than half a percentage point to 6.46%, the biggest move since 1987 and the highest level since late August.
In another reversal in mortgage rates, the Mortgage Bankers Association said Wednesday that rates on fixed-rate home loans dropped last week to 6.28% from 6.47% the previous week.
Spreads also signal retreat
Parts of the $6.7 trillion secondary market for mortgages are also showing modest signs of improvement from recent weeks, though trading levels still indicate investors are more nervous about mortgages than they were before the government announced several big initiatives to get credit flowing again.
Spreads on mortgage-backed securities compared to U.S. Treasurys - a common way to show moves in risk perception - have narrowed 28 basis points since Friday to 121 basis points, according to Merrill Lynch's U.S. Mortgage-Backed Securities Index.
Two years ago, in contrast, the spreads were under 50 basis points, according to Merrill Lynch.
One basis point is 1/100th of a percentage.
Narrower spreads indicate mortgage investors are less worried about payment risk and so aren't asking for higher rates to invest in these securitized pools of mortgages. That's key for homeowners: Banks, which sell the mortgages they originate to this secondary market, can lower the rates they charge on new loans when yields on mortgage-backed securities fall.
"People are feeling a little more confident. For one thing, Libor is dropping," said Roseanne Briggen, an analyst at Informa Global Markets.
As the benchmark London interbank offered rate falls, banks find it easier to lend to each other, freeing up capital to buy mortgage-backed securities and make new loans.
Nonetheless, spreads on mortgage-backed securities are wider than they were in the second week of September after the U.S. government put Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) and Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) into conservatorship - echoing the trend in mortgage rates. The government's landmark decision followed weeks of speculation that the mortgage finance companies could fail because of mounting problem loans, jeopardizing their roles as the biggest buyers of U.S. mortgages.
"The initial optimism that Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) and Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) weren't going out of business caused a downdraft in rates," said Keith Gumbinger, vice president at HSH Associates.
But that optimism faded in subsequent weeks as concerns about the economy put more pressure on outstanding mortgage-backed securities, said Gumbinger and others.
Last week, investors digested news that industrial production and retail sales plunged in September while housing starts dwindled to their second-lowest level in half a century.
Hedge funds, meanwhile, have been unloading liquid assets to cover losses in commodities related stocks. Those sales likely included mortgage-related securities, analysts said.
Plus, the U.S. Federal Deposit Insurance Corp.'s announcement last week that it would guarantee bank debt likely prompted some investors to sell their mortgage-related debt in favor of higher-yielding bank debt that now comes with government banking.
"Some of the bank paper had got so incredibly wide, it was trading at junk-bond levels," said Roseanne Briggen, an analyst at Informa Global Markets. With the FDIC guarantee, "that's incredibly attractive."
The ripple affect of the FDIC program helped widen spreads on debt issued by the government-sponsored enterprises in the past week, analysts say. And these wider spreads may have prompted Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) to cancel an auction of its benchmark notes for the first time this year.
"Absolutely I think they cancelled it because spreads were so wide," said Briggen.
Higher spreads on these government agencies' own debt make it harder for them to accept lower rates from mortgages they buy from lenders.
Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) spokesman Jason Lobo said the firm would not comment on the cancelled auction except to say the company had previously notified investors that it may forego any one month of issuance.
Spreads on mortgage agency debt have only just started to shrink again.
On Tuesday, the spread between Fannie Mae's (FNM:$0.8000,$-0.1000,-11.11%) 10-year bond and Treasurys fell 15.3 basis points to 95.8 after reaching as high as 110.8 basis points last week.
Still, recently narrowed spreads are trading well over the average 67.7 basis points for the year and last year's 45 basis points.
"The widening gained steam when the U.S. said it would back, through the FDIC, some new bank debt," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co., in a note to investors.
"The narrowing probably reflects a sense that yields on agency securities have moved too far from Treasuries given the U.S. government's seizure" of the firms, he said.
Analysts say a retreat in mortgage rates is only a matter of time, given the U.S. government's radical and numerous programs to get credit flowing again. Besides investing directly in banks and assuming control of Fannie Mae (FNM:$0.8000,$-0.1000,-11.11%) and Freddie Mac (FRE:$0.8503,$-0.0697,-7.58%) , it has pledged to buy illiquid mortgage-backed securities from banks under the $700 billion Troubled Asset Relief Program, or TARP.
Mortgage-backed securities spreads "in the mid-term would come back slightly but not in a big fashion unless the GSEs, Treasury, or the TARP program steps up the actual buying of illiquid securities," said Derek Chen, fixed-income analyst at Barclays Capital.
When most FNM longs feel like the only reason MM's bring up the price, is so they can bring it down again, then we will be ready to move. We are almost there, IMO...
Fannie,Freddie regulator said U.S. backs debt -WSJ
10/21 12:29 PM
NEW YORK, Oct 21 (Reuters) - The regulator of Fannie Mae (FNM:$0.8717,$-0.0783,-8.24%) and Freddie Mac (FRE:$0.9222,$-0.1478,-13.81%) said the federal government is trying to help the two housing finance providers sell debt on better terms, The Wall Street Journal reported on Tuesday.
James Lockhart, the director of regulator the Federal Housing Finance Agency, at the Mortgage Bankers Association's 95th Annual Convention & Expo in San Francisco on Monday said the government has effectively guaranteed Fannie Mae's (FNM:$0.8717,$-0.0783,-8.24%) and Freddie Mac's (FRE:$0.9222,$-0.1478,-13.81%) debt, the newspaper reported.
"The U.S. government will be behind them short, medium and long term," Lockhart later told the Journal in an interview, the newspaper reported.
The federal government seized control of Fannie Mae (FNM:$0.8717,$-0.0783,-8.24%) and Freddie Mac (FRE:$0.9222,$-0.1478,-13.81%) on Sept. 7 because of fears that a failure of either of them could have severe consequences for financial markets. The two congressionally chartered companies own or guarantee nearly half of of the country's $12 trillion in outstanding U.S. mortgages.
Agency debt securities issued by Fannie Mae (FNM:$0.8717,$-0.0783,-8.24%) , Freddie Mac (FRE:$0.9222,$-0.1478,-13.81%) and the 12 regional Federal Home Loan Banks have cheapened dramatically recently, spurred by news that the Treasury plans to buy stakes in U.S. banks and the Federal Deposit Insurance Corp will provide guarantees on bank debt for three years.
The FDIC said it would try to unlock interbank lending by guaranteeing 100 percent of the senior unsecured debt of banks and other depository institutions. It also will guarantee all deposits held in non-interest-bearing transaction accounts until the end of 2009.
While a multitude of events have affected valuations, many say the last leg of the cheapening in agency debt securities. was due to the FDIC announcement.
Investors concluded that bank debt carrying the full faith and credit of the U.S. government would compete with agency debt, sparking a sell-off. The fact that debt from Fannie Mae (FNM:$0.8717,$-0.0783,-8.24%) and Freddie Mac (FRE:$0.9222,$-0.1478,-13.81%) was not included in this plan was perceived as another negative to the credit of agencies as well.
Lockhart said investors needn't worry about Fannie Mae's (FNM:$0.8717,$-0.0783,-8.24%) and Freddie Mac's (FRE:$0.9222,$-0.1478,-13.81%) ability to repay their debt, because the Treasury has agreed to provide as much as $100 billion of equity capital to each company, if needed, the newspaper reported. (Additional reporting by David Lawder, Editing by Leslie Adler)
U.S. House panel kicks off Wall St revamp debate
10/21 12:29 PM
By Kevin Drawbaugh
WASHINGTON, Oct 21 (Reuters) - Sharply criticizing Wall Street's mismanagement and mania for leverage and risk, U.S. lawmakers began on Tuesday what will be a major push in months ahead to overhaul how the government oversees high finance.
With markets in crisis over the worst banking turmoil in decades, the House of Representatives Financial Services Committee held a hearing where lawmakers called for more disclosure by hedge funds and private equity firms.
Markets for credit default swaps -- one of the many complex financial instruments behind the credit crunch -- need to be more open, while the future of mortgage giants Fannie Mae (FNM:$0.8755,$-0.0745,-7.84%) and Freddie Mac (FRE:$0.924,0$-0.146,0-13.64%) needs clarity, lawmakers said.
Credit rating agencies failed to do their jobs, they said, while the debt piled up and regulators fell hopelessly behind the rapid pace of innovation that yielded fortunes for a handful of bankers and a disaster for the American public.
"Our financial regulatory system is broken and needs to be fixed," said New York Democratic Rep. Gary Ackerman.
With elections just two weeks away, committee Chairman Barney Frank, a Massachusetts Democrat, urged members to look forward to 2009, but some partisan bickering erupted.
Republicans blamed Democrats for allowing Fannie and Freddie to run amok in the markets and the halls of Congress. Democrats replied that Republicans for years failed to rein in the companies while in charge of Congress and the White House.
The Bush administration and Congress in recent weeks have scrambled to stabilize the financial system, injecting hundreds of billions of taxpayer dollars into markets, seizing control of failing institutions and buying stock in major banks.
Former Federal Reserve Vice Chairman Alice Rivlin, now a senior fellow at the Brookings Institution think tank, assured lawmakers at the hearing that recent cries about creeping socialism and the downfall of capitalism were overheated.
"But market capitalism is a dangerous tool," she said. "Like a machine gun or chainsaw or nuclear reactor, it has to be inspected frequently to see that it is working properly and used with caution according to carefully thought out rules."
Resetting the rules will be Congress' job next year, with either Democrat Barack Obama or Republican John McCain in the White House. Rivlin urged lawmakers to approach the task with an open mind.
"Getting financial market regulation right is a difficult, painstaking job. It is not a job for the lazy, the faint-hearted or the ideologically rigid -- applicants should check their slogans at the door," she said.
Congress is expected to tackle issues such as mark-to-market accounting, that requires valuing assets at current market values, which Frank said at the hearing will be addressed next year. He said it would be possible to leave mark-to-market accounting in place, but make it more flexible.
Critics of mark-to-market accounting say it has created a downward spiral of writedowns on corporate balance sheets.
Scrutiny is also expected in the months ahead of fundamental questions, such as the definition of what is a bank, which agencies should regulate financial services, and the government's role in in the troubled housing finance sector. (Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)
I think so...
Investors' Appetite Increases For Agency Mortgage Bonds
10/20 01:55 PM
NEW YORK(Dow Jones)--Investors favored mortgage-backed securities guaranteed by Fannie Mae (FNM:$0.9733,$0.0233,2.45%) and Freddie Mac (FRE:$1.07,00$-0.0800,-6.96%) Monday as the credit environment showed some signs of improvement with a key lending rate plummeting.
Risk premiums, or spreads, tightened by 18 basis points over Treasurys to 164 basis points, according to market participants.
"Investors are starting to be more comfortable with the steps being taken to ease the credit crunch," said Mahesh Swaminathan, mortgage strategist at Credit Suisse (CS:$44.7200,$1.3200,3.04%) .
On Oct. 14, the risk premium was quoted at 198 basis points over 10-year Treasurys, he noted, adding the 10-year Treasury rate is 3.92% currently versus 4.02% on Oct. 14.
"Libor is also down sharply on Monday," he said.
The closely watched London interbank offered rates, at which banks borrow from each to fund regular operations, posted their first significant declines in months on Monday.
Three-month U.S. dollar Libor dropped to 4.05875%, its lowest since Sept. 30, from Friday's fixing of 4.41875%, while the one-month rate fell to 3.75125% from 4.18125%, according to data from the British Bankers' Association.
"There is an increased appetite for mortgage-backed securities assets that are relatively cheap," Swaminathan said, adding he expects this to continue.
Volume was "reasonable" Monday, he said, adding the buying was "relatively broad based."
Domestic money managers and leveraged investors were big buyers, said Art Frank, director of MBS research at Deutsche Bank (DB:$45.9800,$2.4800,5.70%) .
More than the volume of buyers though, he said, there was a scarcity of sellers, skewing the market.
These bonds, which are guaranteed by Fannie Mae (FNM:$0.9733,$0.0233,2.45%) and Freddie Mac (FRE:$1.07,00$-0.0800,-6.96%) , play a critical role in the housing finance market. The yields on these bonds determine the mortgage rates that consumers pay on their home loans.
Separately, Pimco's Total Return Fund, the world's largest bond fund, raised its holdings of mortgage-backed securities to 79% by the end of September, a level not seen since at least June 2000, from 69% a month earlier, according to data from the company's Web site.
In contrast, Pimco continued to snub U.S. government debt, reducing its holdings for the ninth straight month, even though Treasurys have benefited over the past couple of months from massive safe-haven flows.
-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@ dowjones.com
(Min Zeng contributed to this report)
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http:// www.djnewsplus.com/al?rnd=KfXVaU4ZPDnNUBv9zalcUQ%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
10-20-081355ET
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-Fannie Mae CEO: Working With Tsy, FHFA To Ensure Access To Funding Strong 10/20 12:42 PM
-Fannie Mae Working With IndyMac Fedl Bank To Modify Loans 10/20 12:42 PM
-Fannie Mae CEO: Going To Be As Flexible, Responsive As Possible 10/20 12:44 PM
-Fannie Mae CEO: Evaluating Risk-Mgmt Efforts,Underwriting Guidelines 10/20 12:44 PM
-Lockhart:Tsy Support Guarantees Existing, Future Fannie, Freddie Debt 10/20 12:44 PM
-Lockhart: TARP To Dramatically Impact Credit Freeze 10/20 12:45 PM
-Lockhart:Asset Program Applies To Pvt Label Securities, Whole Loans 10/20 12:47 PM
(MORE TO FOLLOW) Dow Jones Newswires (201-938-5400)
10-20-081244ET
Copyright (c) 2008 Dow Jones & Company, Inc.
Fannie Mae President and CEO Speaks at MBA Annual Convention
10/20 12:39 PM
WASHINGTON, Oct. 20 /PRNewswire-FirstCall/ -- Fannie Mae (FNM:$0.97,00$0.02,002.11%) President and Chief Executive Officer Herbert M. Allison delivered remarks today at the Mortgage Bankers Association's 95th Annual Convention in San Francisco, CA. Allison provided a brief update of Fannie Mae's (FNM:$0.97,00$0.02,002.11%) service to the market.
The full text of Mr. Allison's remarks can be found on the company's web site at: http://www.fanniemae.com/media/pdf/speeches/nat_mba_remarks_102008.pdf.
Fannie Mae (FNM:$0.97,00$0.02,002.11%) is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae (FNM:$0.97,00$0.02,002.11%) has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. In 2008, we mark our 70th year of service to America's housing market. Our job is to help those who house America.
SOURCE Fannie Mae (FNM:$0.97,00$0.02,002.11%)
Fannie Mae Will Not Issue October 2008 Benchmark Notes(R)
10/20 10:49 AM
WASHINGTON, Oct. 20 /PRNewswire-FirstCall/ -- Fannie Mae (FNM:$0.9696,$0.0196,2.06%) today announced that it will not issue Benchmark Notes this month. As announced in our 2008 Benchmark Securities Issuance Calendar, the company may forego any scheduled Benchmark Notes issuance.
Fannie Mae (FNM:$0.9696,$0.0196,2.06%) exists to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae (FNM:$0.9696,$0.0196,2.06%) has a federal charter and operates in America's secondary mortgage market to enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers. In 2008, we mark our 70th year of service to America's housing market. Our job is to help those who house America.
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities of Fannie Mae (FNM:$0.9696,$0.0196,2.06%) . Nothing in this press release constitutes advice on the merits of buying or selling a particular investment. Any investment decision as to any purchase of securities referred to herein must be made solely on the basis of information contained in Fannie Mae's (FNM:$0.9696,$0.0196,2.06%) Offering Circular dated April 1, 2008, and that no reliance may be placed on the completeness or accuracy of the information contained in this press release.
You should not deal in securities unless you understand their nature and the extent of your exposure to risk. You should be satisfied that they are suitable for you in the light of your circumstances and financial position. If you are in any doubt you should consult an appropriately qualified financial advisor.
Benchmark Notes is a registered mark of Fannie Mae (FNM:$0.9696,$0.0196,2.06%) . Unauthorized use of this mark is prohibited.
SOURCE Fannie Mae (FNM:$0.9696,$0.0196,2.06%)
Maybe, I am wrong, but I think that means they are cool on the money front...