Freddie $1 Billion 5-Year Reopening Sold To Yield 2.861%
Monday December 1st, 2008 / 18h34
By Anusha Shrivastava Of DOW JONES NEWSWIRES NEW YORK-(Dow Jones)- The cost of borrowing funds has gone down for Freddie Mac (FRE), which sold a $1 billion reopened note Monday. Helping to bring down the cost is last week's announcement from the Federal Reserve that it would buy up to $500 billion of mortgage bonds guaranteed by Fannie Mae (FNM), Freddie and Ginnie Mae, providing the ultimate support to prop up the $4.8 trillion market of these securities. The central bank also will buy $100 billion of the mortgage finance companies' debt securities, including that of the Federal Home Loan Bank, through reverse auctions starting this week. Freddie's note sold to yield 2.861% or 104.5 basis points over comparable Treasurys. The original $3 billion 4.125% five-year note maturing Sept. 27, 2013 sold to yield 4.172% or 113 basis points over five-year Treasurys on Aug. 20. Freddie's note, the first sold since the Fed's announcement, was reopened twice before Monday, with a $1 billion reopening sold to yield 3.975% Sept. 3, and another $1 billion sold to yield 3.740% Oct. 9. After the third reopening, the total outstanding size of the reference notes security is $6 billion, the agency said. The issue will settle Dec. 2. Its CUSIP number is 3137EABS7. With this note, Freddie has issued $49 billion of Reference Notes securities this year and has approximately $255 billion in reference notes and reference bonds securities outstanding. So far, other initiatives to prop up the market include a plan to have the government-sponsored enterprises buy nearly $200 billion of these bonds and the U.S. Treasury's unlimited purchase of these bonds have done little to stop the weakening of risk premiums on mortgage bonds. Two weeks ago, risk premiums on these bonds were hovering near their historical wides of 293 basis points over comparable Treasury yields, hit during the week before Bear Stearns collapsed in March. On Monday, risk premiums on agency debt are mixed, with most one to three basis points tighter, according to TradeWeb data. -By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com (Prabha Natarajan contributed to this report) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=cyyj%2Fj9l%2Faz7taM%2FBIG0ZQ%3D%3D. You can use this link on the day this article is published and the following day.
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