Fannie, Freddie CDS spreads narrow 9 bps - Markit

NEW YORK, July 9 (Reuters) - The cost of protecting the debt of Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) with credit default swaps narrowed on Wednesday, a day after their regulator eased concerns about a massive capital shortfall.

Five-year credit default swaps on the mortgage finance companies fell by about 9 basis points to about 66 basis points, or $66,000 a year to protect $10 million of debt, according to data from Markit Intraday.

Swaps on Fannie and Freddie had widened on Monday amid fears that tougher accounting treatment of their securitized assets could force them to raise capital.

On Tuesday, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, eased those fears when he said an accounting change would not dictate their capital requirements. For details click on [ID:nL09127631]. (Reporting by Dena Aubin; Editing by James Dalgleish)