Fannie Mae-No Politics (FNMA)

[LuLeVan]

JPS being made whole or converting to commons has nothing. Zilch. Zero to do with senior cram down. Those two events are completely unrelated.

That's not true IMHO. An important question is in which order a conversion of SPS and/or JPS into commons takes place.

According to Calabria's book, any conversion of SPS and JPS into commons is supposed to take place simultaneously, and that would be an acceptable outcome for JPS holders.

But it would be much less favorable if first the JPS were converted into commons and afterwards the SPS were converted into the (then already JPS-"prediluted") commons. Because in the latter transaction JPS and commons would both be extremely diluted due to the immense volume of the SPS (SPS at $193 billion; LP at almost $300 billion).

However, JPS holders could invoke their contractual rights and refuse to approve the second variant.

Worst "order" for JPS holders:

1. Warrents execution, then
2. JPS to common conversion, then
3. SPS to common conversion

Most likely outcome: first (1), then (2 + 3) taking place simultaneously with equal haircut terms, if any.