Fannie Mae's record Benchmark Notes tighten in trading; agency spreads steady

By Lisa Kerner

Charlotte, N.C., Feb. 27 - Fannie Mae's largest ever offering of Benchmark Notes that priced Thursday narrowed in trading Friday, said one source close to the deal.

Meanwhile the agency market overall was holding firm.

The new two-year notes were "performing quite well" and trading at "around 661/2" basis points on Friday, according to the source.

That was tighter than the 68 bps spread at which they priced Thursday.

The source said there was "great buying going on in the front of the market."

Fannie Mae priced $15 billion of two-year debt at Treasuries plus 68 bps on Thursday.

The 1.75% notes, which mature March 23, 2011, priced at 99.897 to yield 1.801%.

The offering was the all-time biggest in Fannie Mae's Benchmark Note program, the agency said.

In trading Friday, spreads were "overall unchanged," with agency debt "aggressively outperforming swaps," according to a source.

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