7/8T3:55 Stocks in the News

FNM Fannie Mae pays record spreads on two-year note sale - Bloomberg.com (15.25 -2.32) -Update-
A Bloomberg.com story out earlier today discusses this morning's 2-year note pricing. Bloomberg.com reports that FNM paid a record yield over benchmark rates on $3 bln of two-year notes amid concern that the U.S. mortgage-finance co doesn't have enough capital to weather the biggest housing slump since the Great Depression. The 3.25% benchmark notes priced to yield 3.27%, or 74 basis points more than comparable U.S. Treasuries, the Washington-based company said today in an e-mailed statement. That's the biggest spread since Fannie Mae first sold two-year benchmark notes in 2000 and triple what it paid in June 2006. Investors and traders are overlooking the government's implied guarantee of Fannie Mae and Freddie Mac (FRE) debt as credit losses grow. The companies have raised more than $20 bln since December as their combined losses grew to more than $11 billion. Credit-default swaps tied to their $1.45 trillion of AAA rated debt are trading at levels that imply the bonds should be rated A2 by Moody's Investors Service, according to data compiled by the firm's credit strategy group.

FRE Freddie Mac subordinated debt risk climbs to 3-month high - Bloomberg (10.36 -3.07) -Update-