Freddie (FRE) & Fannie (FNM) 01 (May 08 - Feb 12)

[millionairemind]

He followed our gahmen's lead to buy into UBS (United Bank of Singapore)???

[ishak]

SEC limits 'short selling' of Freddie Mac and Fannie Mae stock

Tuesday, July 15, 2008
Steven E.F. Brown - San Francisco Business Times

Christopher Cox, chairman of the Securities and Exchange Commission, told Congress Tuesday that the SEC will use emergency powers to limit "short selling" of stock in mortgage giants Freddie Mac and Fannie Mae.

Cox said the SEC will issue an emergency order Tuesday in testimony to the Senate Banking Committee.

Short selling happens when a seller sells stock he doesn't own, hoping the price will drop. He can then buy shares at the lower price and make a profit on the difference. The practice has a long history -- some people think it added to the catastrophic crash in tulip prices in Holland during so-called "Tulip mania" in 1636 and 1637. Critics also blamed short selling for intensifying the great Wall Street crash in 1929.

U.S. regulations do govern short selling, and one of them, Rule 10a-1, the "uptick rule," was eliminated by the SEC a year ago. The commission said the change was "designed to modernize and simplify short sale regulation."

Today's SEC action will change requirements about the shares sellers borrow in order to sell them short. The order will restrict sellers' ability to sell shares without actually having them, which sometimes causes problems after the sale when sellers can't get hold of the shares.

Fannie and Freddie own or guarantee nearly half of all U.S. mortgage debt -- some $5 trillion worth.

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) saw their shares lose nearly half their value in early morning trading Friday, before their prices climbed again. Fannie Mae's shares closed Friday at $10.25, down 22 percent. Freddie Mac's closed at $7.75, down 3 percent.

On Monday shares of both companies rose by more than 30 percent in pre-market trading before boarding a stock price roller coaster after the opening bell. Shares in Freddie closed down 8 percent at $7.11 on Monday, while Fannie's closed down 5 percent at $9.73.

On Tuesday Freddie's shares closed at $5.26, down 26 percent. Fannie's closed down 27 percent at $7.07 each.

The two companies are mandated by Congress to provide housing market funding. Fannie Mae -- the Federal National Mortgage Association -- was started during the Depression in 1938, and was a government agency for its first 30 years. Freddie Mac -- the Federal Home Loan Mortgage Corp. -- was started in 1970.

[kennynah]

well...he works with our carrier....so, maybe.... he also bot C....again....expletives....

[kennynah]

SEC limits 'short selling' of Freddie Mac and Fannie Mae stock

Tuesday, July 15, 2008
Steven E.F. Brown - San Francisco Business Times

Christopher Cox, chairman of the Securities and Exchange Commission, told Congress Tuesday that the SEC will use emergency powers to limit "short selling" of stock in mortgage giants Freddie Mac and Fannie Mae.

.

might as well just suspend the counters....knn...so scared...

[iam802]

Freddie Gets Asia, Europe Buyers for $3 Billion Bonds (Update1)

http://www.bloomberg.com/apps/news?pid= ... refer=home


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July 18 (Bloomberg) -- Investors in Asia and Europe snapped up a $3 billion sale of Freddie Mac bonds at near record yields, a sign that the beleaguered mortgage finance company has the support of foreign central banks.

Investors outside North America including central banks bought 61 percent of the two-year notes yesterday, McLean, Virginia-based Freddie Mac said. That compares with 55 percent in its last sale of securities with the same maturity in May.

Freddie Mac fell 64 percent in New York Stock Exchange trading during the past month and Fannie Mae lost 56 percent of its market value on concern they may not have enough capital to survive the housing slump. Treasury Secretary Henry Paulson announced a rescue plan for the nation's biggest mortgage companies on July 13 and the Wall Street Journal reported today that Freddie Mac may sell $10 billion of new shares, citing people it didn't identify.

``We're operating as business as usual this week,'' Treasurer Timothy Bitsberger, who was assistant secretary for financial markets at the Treasury before joining the government- chartered company in 2006, said in a telephone interview. ``The dramatic change is that we're just under a very large, powerful microscope.''

Wider Spreads

Freddie Mac and Fannie Mae rely on foreign institutions to finance their business. The Federal Reserve held $983.9 billion of so-called agency debt on behalf of international investors as of July 16, up from $950.9 billion on June 4 and $1.83 billion in 2003.

While some investors may have lost confidence in the companies, ``all I know is that we've been able to sell paper this week,'' Bitsberger said.

Freddie Mac fell 64 cents, or 7.7 percent, to $7.69 at 11 a.m. in Frankfurt, where 38,000 shares traded. Shares in Fannie Mae dropped 47 cents, or 4 percent, to $10.45 with about 16,000 shares changing hands.

Yields on the companies' debt rose relative to Treasuries this week as Paulson's plan to seek authority from Congress to pump equity into Fannie Mae and Freddie Mac and to increase their lines of credit met resistance from lawmakers. Freddie Mac and Fannie Mae weren't the only ones facing wider spreads, Bitsberger said. Corporate and mortgage debt spreads also increased.

`Decent Incentive'

The gap, or spread, on Freddie Mac's benchmark debt widened to 83 basis points, from 50 basis points on Dec. 31, according to Merrill Lynch & Co.'s U.S. Agencies, Freddie Mac Reference Notes Index. The premium rose as high as 101 basis points in March, compared with 34 basis points a year ago. A basis point is 0.01 percentage point.

Freddie Mac's reference notes yesterday sold at the widest spread to Treasuries in at least five years. The debt was priced to yield 3.358 percent, or 88 basis points more than U.S. government debt of similar maturity.

``You have better liquidity in Treasuries, but 88 basis points is a fairly decent incentive,'' said Daniel Fuss, vice chairman of Loomis Sayles & Co. in Boston and co-manager of the $18 billion Loomis Sayles Bond Fund. The companies' notes are ``selling where they ought to sell,'' he said.

Freddie Mac received higher-than-average demand earlier this week for $3 billion of three- and six-month bills. The bid-to- cover ratio, which compares total bids with the amount sold, was more than 50 percent above the average of the past three months, according to Stone & McCarthy Research Associates. The ratio for the three-month auction was 4.16, compared with an average of 2.83.

Foreigners Move In

Asian investors bought at least 34 percent of the Freddie Mac debt sold yesterday, while European buyers purchased 27 percent, the most for two-year notes in more than a year, according to Nancy Vanden Houten, an analyst at Stone & McCarthy in Skillman, New Jersey.

Net foreign purchases of Fannie Mae, Freddie Mac, and other so-called agency debt and agency mortgage-backed securities, rose to $24.2 billion in May from $15.3 billion in April, Treasury said this week.

The senior debt of Fannie Mae and Freddie Mac is rated AAA because of its implied guarantee by the U.S. government, making it attractive to central banks, pension funds and insurance companies seeking low-risk investments.

Asian banks and insurance companies own about $800 billion of the companies' debt, including $200 billion held by Japan and $376 billion by China, Moody's Investors Service said in a report yesterday, citing the U.S. Treasury.

`Miniscule' Default Risk

Moody's said Fannie Mae and Freddie Mac pose ``little risk'' to Asian banks and insurance companies that hold the securities because any loss in value would be ``limited and temporary.'' The ``risk of default is miniscule, in line with the Aaa ratings,'' Deborah Schuler, a Moody's senior vice president, wrote in a report released yesterday.

While the company paid its highest yields compared with Treasuries to sell the notes and bills, the spreads reflect increases across the market, rather than investors avoiding the company, Bitsberger said.

The average spread on corporate bonds climbed to 297 basis points yesterday, compared with 203 basis points on Dec. 31, according to Merrill's U.S. Corporate Master index. Spreads on mortgage-backed securities guaranteed by U.S. agency Ginnie Mae have risen to 134 basis points from 79 basis points, according to Merrill's GNMA Master index.

``When you say we're wider, I can say we've far outperformed any other type of bond asset classes,'' Bitsberger said. ``I think the past year, where we've been in a flight to quality environment, I'd be surprised if we weren't wider to Treasuries.''

[millionairemind]

Just issued $3B bond, now $10B share offer??? something is brewing..

Freddie Mac mulling $10 bln share offer: report
Fri Jul 18, 2008 6:43am EDT
Reuters) - Mortgage giant Freddie Mac is considering raising capital by selling as much as $10 billion in new shares to investors, The Wall Street Journal reported, citing people familiar with the matter.

The report comes after the U.S. Treasury and Federal Reserve announced a plan on Sunday to shore up the balance sheets and borrowing capabilities of Freddie Mac and sister company Fannie Mae.

Such a share sale, which has not yet been determined, could forestall a full government rescue, the WSJ said.

Investors, sensing the need for these pillars of the U.S. housing market to raise capital -- and thereby diluting existing shares -- sent their stock prices down more than 60 percent this month alone.

The main buyers for any new-stock issues are likely to be existing shareholders worldwide, the paper said, citing one person involved in the discussion.

Any sale would have to offer a high rate of return to attract buyers, given the near-14 percent yield on Freddie's preference shares, the paper added.

At that rate even a $5 billion preferred-stock offering would mean a company payout of $690 million a year, reducing the money available to common-stock shareholders, cutting the value of those holdings and putting further pressure on the share price.

Shares in Asia extended losses to fall 1.1 percent on Friday after the newspaper report, which added to worries about the stability of the U.S. financial sector.

Shares of Freddie Mac and Fannie Mae have taken a beating this year as the companies face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.
Shares of Fannie and Freddie surged 18 percent and 22 percent, respectively, on Thursday, after Freddie pulled off its second successful debt sale following the announcement of the U.S. rescue plan.

The shares were also helped by an emergency rule issued on Tuesday by U.S. securities regulators to limit certain types of short selling of shares in major financial companies, including Fannie Mae and Freddie Mac.

While the storm surrounding the companies appears to be easing, they still face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.

Together, the companies own or guarantee more than $5 trillion in U.S. mortgages. They have lost more than $11 billion since June, and have predicted more losses to come.

Even if Freddie and Fannie survive in their current form, it is not clear if they will still be as willing to lend as much to the U.S. housing market as home prices continue to slump. The two companies finance about half of U.S. homes.

[ishak]

Freddie Mac Seeks Permission to Sell Billions of Dollars in Stock

By Jeffrey H. Birnbaum
Washington Post Staff Writer
Friday, July 18, 2008; 11:30 AM

Freddie Mac, the troubled mortgage-finance giant, today asked permission from the Securities and Exchange Commission to sell billions of dollars of stock, apparently in an attempt to take advantage of a rise in its share price this week.

The McLean-based company had said earlier this year that it planned to raise $5.5 billion through stock sales, a beefing up that it had agreed to accomplish at the urging of federal regulators.

The Wall Street Journal today reported that the company might try to raise as much as $10 billion in new shares to investors, a move that analysts said could nearly double its market capitalization.

"The timing, amount and mix of securities to be offered will depend on a variety of factors, including prevailing market conditions, and is subject to approval by our board of directors," said Sharon McHale, a spokeswoman for Freddie Mac, in an e-mail today. "As indicated, we indicated in our Form 10 registration statement (filed with the SEC this morning), Freddie Mac continues to review and consider this and other alternatives for managing our capital."

Industry observers said the SEC is likely to approve Freddie Mac's request.

After tumbling by nearly half last week, the shares of Freddie Mac and its D.C.-based cousin company, Fannie Mae, rebounded somewhat this week.

Through a sale of equity to investors, Fannie Mae raised $7.4 billion in May in a similar effort to improve its financial balance sheet. The company has not said that it has plans to sell more equity anytime soon.

Both companies have been hurt by a decline in the housing market but were bolstered by the government's announcement Sunday that it would work to prop them up if they ran into serious financial trouble. The firms assert that they are financially sound and would not need government assistance.

Shares of Freddie Mac are trading up 14 percent, to $9.51, and Fannie Mae is up 24 percent, to $13.56, as of 11:15 am. today.

[kennynah]

time to start looking at these.... once they can raise money.... confidence can return...possibly...+ fed/treasury already behind them...anyways, these 2 wont die...whatever happens...70% of USA mortgage back securities are with them...they die, a big chunk of USA dies with them...no way...they will survive...

just have to choose a meaningful way to play these 2...

any suggestions?

[ishak]

Sold my SKF, waiting for new entry point for UYG and XLF.

Now wait and evaluate the earning reports from the rest of the financial sector.
To me, the faster the rate of oil drop the more dubious it seems to me that speculation is in play.

[kennynah]

ishak : u think financials will rally further?