On over 18 times the average trading volume, FMCC shares lost whole 14.98% from their price and closed the market at $0.266. The traded around $1.20 by the end of June stock was obviously not meant to recover after its sharp drop down to the current levels.
Though, last Friday the bottom from the middle of July was still not hit, if that could be some encouraging news for investors. This time, the severe price fall coincided with the an announcement that FMCC will offer $4 billion of reference bills at market’s open today. The entire offering consists of $2 billion of three-month bills and $2 billion of six-month bills.
That news looked like it was extremely negative for investors, and the reaction to a similar announcement earlier this month was also not full of excitement. About ten days ago, the pricing of another notes offering was announced. The issue was supposed to be settled on September, 10 and concerned new 1.75% $5 billion five-year USD Reference Notes, which were priced at 99.714 to yield 1.81%, or 29.5 basis points more than five-year U.S. Treasury Notes. The new securities were supposed to be listed on the Euro MTF market of the Luxembourg Stock Exchange.
The issued at the same time financial results for the quarter ended June, 2010 were also rather negative and could not support higher trading for FMCC stock. For its liquidity and to continue operating the business, FMCC is still dependent on the Treasury. At the end of June, the company had more liabilities than assets and must thus obtain further financing from the Treasury pursuant to its commitment under the Purchase Agreement in order to avoid being placed into receivership by FHFA.
FMCC has increasing net losses and the net interest income also decreased to $4.1 billion during the second quarter of this year as compared to $4.3 billion for the same period last year. This was due mainly to the bigger portion of the non-performing mortgage assets, which increased from 5.2% to 5.9% on the same year-over-year basis.
