FHLB $3B, 2-Yr Global Sold At 3.394% Yld, +138 BPS Over Tsys
09/24 03:38 PM
NEW YORK (Dow Jones)--The Federal Home Loan Banks system sold $3 billion in two-year global debt securities at 138 basis points over comparable Treasurys on Wednesday and drew nearly normal levels of Asian investors.
FHLB sold its bond at a yield of 3.394%, as the pricing on the note went up to 138 basis points from its initial price talk of 115 basis points over comparative Treasury yields.
The risk premium on the bond increased due to the higher yield of 2.115% paid at the U.S. Treasury's auction of $34 billion in two-year notes Wednesday.
The 3.375% coupon bond, which matures Oct. 20, 2010, sold at a price of 99.960.
The pricing was designed to attract as much real money into the pot as possible, said Jim Vogel of FTN Financial in a research note ahead of the sale.
The previous two-year global bond sold at a yield of 3.442%, and priced at 78.5 basis points over comparative Treasurys yield back on June 28.
A spot of cheer in the issue was the nearly 28% share of Asian investors, which was was just shy of the normal one-third take.
FHLB's last two-year note in July drew only 13% of Asian buyers as the uncertainty about the fate of the government sponsored enterprises made buyers leery.
In contrast, European investors bought 8% this time, much less than the 18% they bought in July.
The distribution of buyers of the Wednesday issue include 30% to central banks, 28% to investment advisors and fund managers, 14% to insurance and pension funds, 10% to financial institutions.
FHLB's current two-year benchmark in the secondary market was trading 125 basis points over comparative Treasury yield, about 10 basis points over that of similar Fannie Mae (FNM:$1.75,00$0.44,0033.59%) notes late Wednesday afternoon.
-By Prabha Natarajan, Dow Jones Newswires, 201-938-5071; prabha.natarajan@ dowjones.com
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09-24-081538ET
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