Replies to post #695702 on Fannie Mae (FNMA)

[kthomp19]

They would have to cancel the SPS at the very least. If they convert it to commons I dont think any significant new money would be coming in.

I disagree. New money won't care whether the seniors are cancelled or converted to common prior to the re-IPO because neither of those, vis a vis the other, would affect to how much capital has to be raised or how many shares the new investors get.

We are looking at a USD 100B or more raise. That is really an absurd amount of new money for practically a government owned company.

Petrobras raised $70B, so I don't see $100B as all that absurd. The large necessary capital raise size is due to the 2.5% minimum capital requirement in HERA, at least if it happens in the next couple of years.

Thats why I think the government relist it by cancelling the Seniors and relist while the warrants are valid with a backstop from the government until they build enough core capital.

Enough core capital for what? Release from conservatorship? That's decades away with only retaining earnings, even with the recently-lowered capital standards.

There isn't any reason to relist the shares prior to the re-IPO anyway. And that re-IPO will be necessary for release from conservatorship prior to the decades-long timeframe.