Bloomberg (07/28/08); Kruger, Daniel
A fourth consecutive quarter of U.S. profit declines, coupled with the fastest inflation in 17 years, is turning debt sold by Fannie Mae and Freddie Mac into hot picks for such major bond investors as Pacific Investment Management Co. (Pimco), T. Rowe Price Group Inc., RiverSource Institutional Advisors and U.S. Bancorp's FAF Advisors. The government's decision to stand behind the two government-sponsored enterprises and their yields have made the bonds a favorite. The Senate approved legislation on July 26, permitting the federal government to inject capital into the GSEs. Bill Gross, who oversees the $128 billion Total Return Fund for Pimco, comments, "This legislation has indicated to investors that Fannie and Freddie are not implicitly guaranteed, not explicitly guaranteed, but we're close to that point.''
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