Fannie Mae-No Politics (FNMA)

[JOoa0ky]

How do you think the really low-div series will be dealt with? Freddie has several series that would pay dividends well under 1% of par value if divs were to be turned back on right now. Example: FMCCM, $50 par, $0.19 divs per year.

The fact that the market prices it at $8.25 right now, while higher-div series are mostly between $9 and $10, tells me that the dividends might not matter as much as I once thought. Someone paying $8.25 for FMCCM is doing so almost solely for the place in the capital structure given the tiny dividend.

Freddie knows that if the lower divs don't convert, the holders won't be able to sell it on the open market at par post conservatorship. They will have to trade well below par for anyone to buy it off of them. Knowing that, Freddie can offer them however many peanuts they want to. Freddie has a lot less leverage for the higher divs and especially FMCKJ due to call date interval.

I would not buy the ones with <1% div unless there is a substaaaaantial discount. At least 50% discount from the other prefs.