Fannie Mae (FNMA)

[kthomp19]

Leaving existing JPS prevents the issuance of new ones.

Exactly. $33B is a good amount to have on the balance sheet, but if FnF start getting much above that then the common share price would go lower anyway due to the dividend and liquidation preference on the prefs (yes, liquidation preference matters even for healthy companies, let alone ones that can be taken over at the drop of a hat).

A junior-to-common conversion followed by an issuance of another $33B or so in new juniors lets FnF reset the junior pref interest rate, and it fits what we're hearing about the recap not being all from one big offering.