Big investors: No problem with Freddie debt sale

Sun Jul 13, 2008 9:59pm BST
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By Jennifer Ablan

NEW YORK (Reuters) - Wall Street analysts and investors, including Loomis Sayles' Dan Fuss, one of the most widely followed U.S. bond managers, on Sunday said they didn't expect to see any problems with Freddie Mac's planned bill sale on Monday.

Freddie Mac is due to sell $3 billion of three- and six-month debt in what will be a barometer of market appetite for the firm's securities at a time when its share price has sunk sharply, causing concern about its capitalization.

"I don't expect any problems with the Freddie Mac offering," Dan Fuss, vice chairman of Boston-based Loomis Sayles, which oversees more than $100 billion in fixed-income securities, told Reuters by email.

Loomis Sayles has bought 'agency debt' of Fannie Mae and Freddie Mac, the two biggest sources of U.S. mortgage financing, in recent days as they provide "outstanding value," Fuss said, adding he will be looking at Monday's deal.

The Freddie Mac sale will be "done fairly easily. The debt securities are money good," added Andrew Harding, chief investment officer of fixed income at Allegiant Asset Management which oversees $20 billion in fixed-income securities, meaning they are seen as safe investments.

Friday, debt of Freddie and rival Fannie Mae soared in their biggest one-day gain in history on speculation any government takeover of the troubled housing giants would make the bonds more like ultra-safe U.S. Treasuries.

Yield spreads on the corporate "federal agency" debt of the companies tightened as much as 29 basis points for five-year issues, according to broker GovPX/Garban-ICAP.

The U.S. Treasury during the weekend was checking banks and other institutions which typically buy the type of short-term securities Freddie Mac will sell in one of its regularly scheduled sales of securities, assessing their appetite for them, according to the Washington Post.  Continued...

 
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