Tuesday, January 06, 2009 4:09:06 PM
By Anusha Shrivastava
Of DOW JONES NEWSWIRES
NEW YORK(Dow Jones)--Freddie Mac (FRE) sold a $6.5 billion deal in two parts Tuesday as it tested investor appetite for its long-term debt. The $3.5 billion 2.50% note due 2014 sold at 95 basis points over comparable Treasurys to yield 2.621%. The $3 billion 1.50% note due 2011 sold at 77 basis points over Treasurys to yield 1.565%. Joint leads on the deal were Barclays Capital, Citigroup Global Markets Inc. and Goldman Sachs Group. Including Tuesday's bonds, Freddie has about $257.6 billion in reference notes and reference bonds securities outstanding. The mortgage-finance company has had a difficult time in the last couple of months raising money in the debt markets. It now hopes to resume its capital-raising activities like before, which would allow it to continue guaranteeing and buying mortgage bonds. Last year, investor uncertainty about the extent of government backing to these now nationalized companies and their future kept them cautious about buying the debt. Since November 2008 though, there's been a rapid improvement because the Federal Reserve started buying these so-called agency debt securities. The Fed so far has bought $15 billion of these securities. Risk premiums that Freddie and Fannie Mae (FNM) pay to investors on these bonds over comparable Treasury yields have tightened dramatically, making it cheaper for these companies to raise money. -By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com (Prabha Natarajan contributed to this report) (END) Dow Jones NewswiresJanuary 06, 2009 16:04 ET (21:04 GMT)
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