Replies to post #781206 on Fannie Mae-No Politics (FNMA)

[kthomp19]

What do you believe the JPS are (ultimately) going to be worth? Par? Less than par? Fannie? Freddie? Different value depending on which GSE? Another way of asking this, is do you believe Fannie or Freddie JPS may turn out to be more (or less) valuable than the other?

Given the equal conversion offer by Treasury in late 2020, which would have involved both Treasury and the juniors taking a haircut on their liquidation preference, I no longer think 100% of stated value (what we usually call "par") is a realistic expectation.

I think Fannie's juniors should be a bit more valuable because Fannie is closer to its capital requirements, but that is currently priced in (along with the pre-judgment interest Fannie juniors will get and Freddie juniors won't). I think the premium on Fannie juniors in the market right now is a bit too high, so I am more heavily weighted towards Freddie juniors.

Do you agree? Do you also agree with Pagliara that F&F is NOT a "Trump Trade"?

I think recap/release under a re-elected Biden is possible but quite unlikely. This isn't 100% a Trump trade but it's pretty close.

Do you believe Biden/Treasury/FHA is (currently) performing meaningful work on restructuring F&F, releasing F&F, or perhaps working on closing down these avenues for Trump?

No, I don't. I haven't seen any evidence that would make me believe they are.

At this point, can Biden get anything meaningful done b4 the Election?

Only if he started yesterday.