Subscribe to this blog's feedWell, despite what we wrote last week, Fannie Mae and Freddie Mac are up today. Even the news that JP Morgan is marking down its holdings by 50% hasn't shaken 'em; looks like the successful fundraising has improved everyone's opinions.
Not so fast. First of all, that fundraising went through at quite a spread:
...Freddie yesterday sold $1bn of three-month bills at 2.58 per cent, compared with a 2.475 per cent rate for similar paper sold last week.The mortgage financier also paid a higher 2.858 per cent rate to sell $1bn of six-month paper, compared with 2.78 per cent for a similar sale last week.
Not bad for effectively guaranteed debt! And a writer at Dealbreaker suggests a trade that may be happening - buy the debt and take it straight to the TAF window as collateral, picking up a nice carry on the way - 17.7% annualised.
Is this happening? The Fed refuses to say - it won't give out details on the collateral used (unlike, say, the ECB) though it is now thinking of doing so...
