Replies to post #794702 on Fannie Mae-No Politics (FNMA)

[bradford86]

Maybe when the government restructures its equity you will realize your theories about what may or could happen in your half conversion scenarios do not hold water

0% probability of partial equitization. 0% probability warrants do not get exercised. Based on the recent ibank re-up — they pointed out that the spspa would not be made whole even the stated value in a conversion scenario based on their valuation. Tough crowd. Highlights how much damage the government has done to the balance sheets of these companies. In that context, the only reason to write down anything is to maximize the spending value of the warrants. Otherwise, spspa will fully convert and whether it gets paid face or not depends on market valuation but it is possible that spspa isnt even made whole.

[kthomp19]

For saving face from voters AKA tax payers and saving some sort of face from Shareholders converting the amount needed to repay the 193 billion with the SPSA. Converting enough to payout all JPS from the SPSA leaving the 2 companies with no debt on the books and holding there retained earnings so far.

The conversions are not about repaying the face value of the seniors or juniors. It's about clearing the capital structure to invite new investors, and in the case of the senior conversion to fix the enormous regulatory capital hole.

Then Gov to convert the rest of the SPSA and auction off those to raise money for the Gov ???

Pretty much, yes. Treasury would get their "repayment" of the LP via conversion and sale of those new common shares.

Warrants are warrants stated in the agreement that they were merely there to recoup there investment,

No, this is false. The warrants are not, never were, and were never intended to be collateral. It's the senior prefs that exist to ensure that Treasury at least recoups their investment.