Fannie Mae to offer $6 billion of two-year Benchmark Notes, demand seen strong

By Lisa Kerner

Charlotte, N.C., April 7 - Fannie Mae announced an offering of new issue two-year Benchmark Notes that will price on Wednesday.

One source heard that talk on the expected $6 billion note tightened to 60 basis points from the "low 60s" and that the deal is a blowout.

It "seems reasonable" that the offering tightened to 60 bps, a trader said. Regarding size, he said Fannie Mae was "looking at $4 billion to $6 billion and decided on $6 billion."

The trader said he was "surprised that interest was strong" in the Fannie Mae offer since it comes on the heels of Freddie Mac's sale of $5 billion of two-year Reference Notes about a week and a half ago.

Fannie Mae's two-year Benchmark Notes mature on April 28, 2011.

Barclays Capital Inc., Credit Suisse Securities (USA) LLC, and Goldman Sachs & Co. are the joint lead managers for the offer.

Agency spreads were tighter on Tuesday "as they have been for the last three days," one source said, while another source had spreads "a touch wider." While neither source would offer specifics on how tight or how wide spreads were in terms of bps, one source said spreads were "much better across the board."

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