Fannie Mae-No Politics (FNMA)

[JOoa0ky]

A senior-to-common conversion like the one Mnuchin proposed would involve both Treasury and junior pref holders taking an equal percentage discount on their respective liquidation preferences. If it had happened in late 2020 the haircut would have been huge (70%), but now it would be more like 50% and will be something around 30-40% by the end of 2025.

If you're expecting such a sizable haircut, would you sell off a large part of your positions if this reaches ~50% PAR before release happens?

My plan was to sell off about 20% once this goes to ~50% PAR, although that isn't because of the haircut but rather the time opportunity cost and de-risking. The only reason I'm not selling more is because of tax considerations.