Fannie Mae-No Politics (FNMA)

[kthomp19]

Based on your thoughts about the possible scenario of converting the seniors to commons and JPS into commons, am I understanding this right?

I'll calculate JPS shares at 50% and 100% par with a low conversion to common at .25 cents per share and $2.00 per share based on your speculation.

No, that's not how it's calculated. Instead of starting with a share price at conversion and calculating the number of shares, it's the other way around. First Treasury, FHFA, and the junior pref shareholders will negotiate how the pre-capital raise common will be divided among them and the existing common (note that the existing common won't get a vote here, just like they didn't in late 2020). Then the number of shares will result from that calculation.

familymang went over the math in this post, showing that if the equal haircut cramdown happened a year ago it would have resulted in a 35% haircut (65% recovery) to full LP value for both the seniors and juniors. Back in late 2020 that haircut was 70%, which is why the junior pref shareholders refused.

That haircut drops to 20% by early 2026, which is about the fastest FnF can leave conservatorship anyway since it will require lining up the capital raise, etc.