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Wednesday, April 22, 2009

Agency Bonds

April 22nd, 2009 3:03 pm

Freddie Mac announced yesterday( in my absence) a 5 year deal which they had planned to launch and price today.

Life intervened and the sad death of a senior officer at Freddie led to the postponement. Apparently, the dealers who are marketing the bonds wanted some representation from Freddie that the death of the acting CFO was not connected somehow to fraud or cooked books.

Freddie chose to postpone the pricing for at least one day. I have not seen any statement from Freddie which officially states that the death is unrelated to financial chicanery.

Traders with whom I spoke in unison agree that the deal is likely to price tomorrow.

Regarding the pricing the original talk priced the deal about 4 basis points cheap to the FNMA March 2014 issue.

In general spreads continue to tighten.

One trader noted that beginning May 1 2009 the Treasury market will institute a costly fee for fail to deliver situations. So the trader said that many trades were being    unwound as traders do not wish exposure to punitive measures once that new practice begins.

Two year spreads are 2 basis points tighter. Five year spreads are 3 basis points tighter and 10 year spreads are 2 basis points tighter.

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