UPDATE: Fannie Mae Announces 2-Year Benchmark Note
07 April 2009 - 10:24PM
Dow Jones News
Fannie Mae (FNM) announced a new two-year benchmark note
offering Tuesday, its second debt offering this month.
Fannie didn't announce the size of the deal. Market participants
say the deal is expected to cap at a manageable size of $6
billion.
The offering has received strong demand, and its current price
talk is in the area of 60 basis points over comparable Treasury
yields, said Mark Noble, head of agency trading at MF Global.
The issue opened Tuesday morning at 62 basis points over
comparable Treasury yields.
This issue follows Fannie's sale last week of $4 billion in
three-year notes. The mortgage finance company went with a smaller
size issue after the megadeals earlier this year.
This strategy is similar to that adopted by sibling Freddie Mac
(FRE) in late February when it issued notes of $3 billion and $5
billion in size in March.
Fannie's previous two-year issue was in late February when it
sold $15 billion of these bonds at 68 basis points over comparable
Treasury yields. That bond, with a 1.75% coupon, currently trades 1
basis point wider at 54 basis points over comparable Treasury
yields, according to TradeWeb data.
The most recently sold two-year note from Freddie Mac, with a
1.625% coupon, was trading at a similar range of 55 basis points
over comparable Treasury yields. That issue sold at 71 basis points
over comparable Treasury yields.
Barclays Capital, Credit Suisse and Goldman Sachs are the lead
managers on the current deal, which is expected to settle Thursday.
The deal is expected to price Wednesday.
-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071;
prabha.natarajan@dowjones.com