Washington Post (10/07/08) P. D4
The largest technical default in history will force credit-default-swap investors that sold protection on bonds backed by Fannie Mae and Freddie Mac debt to shell out upwards of 8.5 cents on the dollar for contract settlements. CreditFixings.com says Fannie Mae senior unsecured notes were valued at 91.5 percent of face value and subordinated debt at 99.9 percent of face value by J.P. Morgan Chase, Deutsche Bank and 11 other credit-swap dealers that auctioned the notes. Freddie Mac senior and subordinated notes were valued at 94 cents on the dollar and 98 cents, respectively.
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1 comment:
Are you sure you are talking about BONDS?
Fannie and Freddie have been taken over by the US government, and Secretary of the Tres Paulson has said that their bonds will be paid by the US government.
I think maybe you are talking about the mortgage backed securities that passed through Fannie and Freddie.
But those are backed by the mortgages first, and second the US government will buy some under the bailout, and finally they account for only a small percent of all the mortgage-backed security paper floating around.
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