New York, May 8 - Fannie Mae priced an upsized $2.25 billion of non-cumulative mandatory convertible preferred stock, series 2008-1 to with an 8.75% dividend and an 18% initial conversion premium.
The deal came at the rich end of dividend talk of 8.75% to 9.25% and the cheap end of premium talk of 18% to 22%. It was increased from a planned $2 billion amount.
Each $50 liquidation preference share will convert into between 1.5408 and 1.8182 shares on May 13, 2011. They are convertible any time at the 1.5408 ratio.
The preferreds have a greenshoe for $337.5 million.
J.P. Morgan Securities Inc., Lehman Brothers Inc. and Banc of America Securities LLC were joint bookrunners. Goldman, Sachs & Co. and Merrill Lynch were co-managers.
Fannie Mae also priced $2.25 billion or 82 million shares at $27.50 each.
Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. were joint bookrunners for the stock offering, with Goldman, Sachs and Morgan Stanley as co-managers.
Lehman Brothers Inc. and J.P. Morgan Securities Inc. were global coordinators for both transactions.
"Investor demand for these offerings was very strong, which we believe reflects investor confidence in the long-term value of our business and our leading market position," said David Benson, senior vice president and treasurer of Fannie Mae, in a news release.
Proceeds from the offerings will be used for general corporate purposes, including enabling the company to maintain a strong, conservative balance sheet, enhancing long-term shareholder value and providing stability to the secondary mortgage market.
A further offering of non-cumulative non-convertible preferred stock is planned for the "very near future."
The home mortgage lending company is based in Washington, D.C.
| Issuer: | Fannie Mae
|
| Issue: | Series 2008-1 non-cumulative mandatory convertible preferred stock
|
| Amount: | $2.25 billion (45 million shares)
|
| Greenshoe: | $337.5 million (6.75 million shares)
|
| Maturity: | May 13, 2011
|
| Dividend: | 8.75%
|
| Price: | Par of $50
|
| Initial conversion premium: | 18%
|
| Conversion ratio: | 1.5408 (at any time), 1.5408/1.8182 (at maturity)
|
| Pricing date: | May 8, after close
|
| Settlement: | May 14
|
| Bookrunners: | J.P. Morgan Securities Inc., Lehman Brothers Inc. and Banc of America Securities LLC
|
| Listing: | New York Stock Exchange: FNA
|
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