Rolf Englund IntCom internetional
"The topic du jour is Fannie and Freddie"
“The topic du jour is Fannie and Freddie.
The Lehman Brothers Credit index for US investment grade companies closed at 270 basis points over US Treasuries last Wednesday, a record high since the early 1990s.
One of the biggest concerns is the health of Fannie Mae and Freddie Mac, the US government-sponsored enterprises that have run into trouble because of the US mortgage crisis. The mortgage financiers, which underpin the US housing market, paid the price for these worries when both were forced to pay record high risk premiums on dollar-denominated bonds this month.
Other issuers forced to pay very high yields over government bonds this month include Citigroup, American Express, AIG and Deutsche Telekom.
Jim Reid, a credit strategist at Deutsche Bank, said: