On July 15, 2009, Freddie Mac (FRE) announced that it sold a $1 billion reopening of its 1.75%, 3-year reference notes security that will mature on June 15, 2012.
The auction attracted more than three bids for every note sold having a bid-to-cover ratio of 3.275 to 1. The notes bear a yield of 1.77%, which is 24 basis points higher than 3-year U.S. Treasury Notes.
On completion of the auction conducted through the Internet, the outstanding size of the 3-year reference notes security will be $7 billion. The issue is listed on the Euro MTF market of the Luxembourg Stock Exchange.
Freddie Mac has been among the hardest hit financial firms by the housing slump, credit crisis and ongoing recession. We do foresee the current expansion of the Home Affordable Refinance Program (HARP) bringing down losses from foreclosures in the upcoming quarters. However, we expect the government conservatorship to continue for a long time and thus see no value in the company for common shareholders.
As such, we maintain our Sell recommendation on the shares.
Read the full analyst report on “FRE”
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