it's official. we got new t-bills. called F-bills
UPDATE 1-Fannie to start debt sales aimed at individuals
By Lynn Adler
NEW YORK, May 10 (Reuters) - In the latest outreach to Main
Street by major U.S. corporations, Fannie Mae <FNM.N>, the No.
1 U.S. home funding source, said on Thursday it will begin
offering senior debt securities aimed at individual investors.
The new program, from one of the nation's largest
borrowers, comes as buyers reach for more yield and quality in
fixed-income assets after a dramatic stock market shakeout.
"Certainly for the investor it's a great opportunity to get
another good credit-quality instrument easily available," said
Gemma Wright, director of market strategy for the Americas at
Barclays Capital. Fannie Mae benefits by deepening its investor
pool, she added.
"Equities have gotten the lion's share of attention over
the last couple of years, but I think bonds are going to have
new interest as people are going to look for yield in other
investment vehicles," Wright added.
Fannie Mae expects to sell "investment notes" in several
issues on a weekly basis, with maturities of one to 30 years,
starting Monday. The notes will have various interest rates,
interest payment dates, maturities and redemption provisions.
Rated triple-A by Moody's Investors Service and Standard &
Poor's, the highest investment-grade credit quality, the notes
will be offered at par in $1,000 increments.
ALL ROADS LEAD TO DIVERSITY
Fannie Mae has historically targeted its debt to large
institutional investors.
"We have felt for a while that it's important for us to
look at the retail base -- a very, very large population -- and
figure out a way to get our debt securities efficiently into
their hands," Linda Knight, Fannie Mae's senior vice president
and treasurer, told Reuters.
New technology aiding widespread distribution, an aging
U.S. population that may boost demand for high-grade
fixed-income debt, stock market volatility and Fannie Mae's
desire to grow itsretail investor base are the main drivers
behind the company's decision to start the program now, she
said.
Demand may rise naturally among ordinary investors who have
been whipsawed by stocks.
When stocks were surging, there was a feeding frenzy,
particularly in high-tech stocks, that unbalanced many investor
portfolios. The value of those holdings often plunged when
equities were hammered this year.
"The last couple of years have really demonstrated how
volatile the equity market can be, and that may be a reason for
retail investors to consider a little more diversification in
their portfolios," Knight said.
BRAND NAME RECOGNITION
Fannie Mae is in good company.
It joins the list of widely known corporations that have
opened their doors wider to individuals in recent months,
offering tailor-made debt investments and an alternative to
widely available U.S. Treasuries.
Housing finance giant Freddie Mac <FRE.N> since late March
has been selling "FreddieNotes"; Tennessee Valley Authority,
the largest U.S. wholesale electricity producer, started
selling "electronotes" in April; Household Finance Corp., a
unit of consumer finance company Household International Inc.
<HI.N>, and Bank of America Corp. <BAC.N>, the No. 1 U.S. bank,
started selling "InterNotes" for ordinary investors in March
and January, respectively.
Other companies may jump on this bandwagon. But it will be
the high-profile and highly regarded names that are most
successful, strategists said.
"You don't have to sell Fannie Mae -- most investors know
about them," said Mario De Rose, fixed income strategist at
Edward Jones & Co., St. Louis., which is one of the dealer
firms in the selling group.
Fannie Mae will issue "in a variety of maturities, you know
they'll be in the market every week and they're a household
name," he said. "These are the things individual investors like
to see."
The company has not determined the size of the "investment
note" program.
Most of the notes will have call features, which give
Fannie Mae the option of redeeming the notes during a specified
period before maturity. The notes will not be redeemable at the
option of the note holders.
Merrill Lynch is the lead manager. Notes purchased from
Merrill by the dealer selling group members may be resold to
individual investors or to other dealers.
REUTERS
Rtr 18:55 05-10-01 |
