Options Wonderland

[3xBuBu]

time to pick up some Fannie and Freddie yet?


Standard & Poor's Ratings Services said on Friday that it may downgrade the subordinated debt and preferred stock of Fannie Mae (FNM Fannie Mae 11.55, -0.47, -3.9%) and Freddie Mac (FRE Freddie Mac 8.27, -0.54, -6.1%) . The agency said any government bailout of the mortgage giants could place these securities lower in the capital structures of the companies. It's still not clear how creditors lower down the pecking order would be treated if the U.S. Treasury had to support Fannie and Freddie. But the language of the current legislation being considered by the Senate suggests that "subordinated debtholders and preferred stockholders would face greater subordination risk," S&P said. "This heightened risk is not incorporated in our current subordinated debt and preferred stock ratings on Fannie Mae and Freddie Mac," the agency added. "We may lower these issue ratings one to two notches at the conclusion of our review of the final legislation."
http://tinyurl.com/5nkt7m





My posting is for my own entertainment, do your own DD before pushing your buy/call button