Fannie Mae-No Politics (FNMA)

[jeddiemack]

Chess. Sorry but you didnt understand the framework or position from which i wrote this premium to redeem high coupon dividend junior preferred.

The situation would be when things are normalized and commons are selling for $120 or so a share. So in order to redeem these shares they can buy them on the open market but, they'd be selling above 25 or so for a 25 par valued preferred. Thats the way bonds trade or investments that are interest rate sensitive considering the low interest rate environment.

So, in order to induce the preferred to sell; you'd have to pay a premium or convert them with a premium. What that means is a conversion of 4 or so preferreds for 1 common share.

Now, considering this. I think its not unreasonable.

However, in the current situation. I'd agree. But my scenario contemplates more normal capital structure and dealings.