Fannie Mae Debt Too Risky? Only When Pain Shared
In the nascent bond market where U.S. government-backed Fannie Mae and Freddie Mac have insured themselves against losses on $383 billion of home loans, strains are starting to emerge.
Securities that Freddie Mac sold eight months ago, which expose investors to some of the risks on loans the mortgage giant guarantees, fell to 91.4 cents on the dollar this week from more than 108 cents in May. Similar notes issued in July by Fannie Mae traded at even lower prices.
Even as issuance sur...