Fed says to buy agency debt on Friday
12/11 02:54 PM
NEW YORK, Dec 11 (Reuters) - The Federal Reserve will buy debt of Fannie Mae (FNM:$0.67,00$-0.03,00-4.29%) , Freddie Mac (FRE:$0.6873,$-0.0627,-8.36%) and the Federal Home Loan Banks in the open market on Friday, the New York Fed said on its Website on Thursday, as part of its latest effort to lower mortgage rates.
Aiming to shore up the housing market that is at the heart of the economy's malaise, the Fed said two weeks ago that it would buy up to $100 billion of debt issued by government-sponsored mortgage enterprises. This is the second operation as part of that program.
Friday's operation will target debt maturing between December 2012 and November 2017, and the risk premiums on those longer maturities narrowed after the Fed's announcement.
The Fed will buy the securities outright in coupon purchases, the New York Fed said on its website, adding that it will open at 2 p.m. (1900 GMT) and close at 2:30 p.m.
The Fed kick-started its program last Friday, Dec. 5, when it bought $5 billion of Fannie Mae (FNM:$0.67,00$-0.03,00-4.29%) , Freddie Mac (FRE:$0.6873,$-0.0627,-8.36%) and Federal Home Loan Bank debt in the open market. In that operation, it targeted the 1- to 2-year maturity range.
Risk premiums on agency debt had already sharply tightened on Wednesday on expectations the Fed would be buying again this week. (Reporting by Kristina Cooke and Lynn Adler; Editing by James Dalgleish)
