Agency spreads tighten; Freddie Mac prices two-year, 10 year Reference Notes

By Lisa Kerner

Charlotte, N.C., March 26 - Agency spreads were tighter overall on Thursday by 3 to 4 basis points and unchanged in the front end, according to a trader.

No specific reason for the tightening was given on what the trader called a "slow day." The trader said spreads weren't impacted by Freddie Mac's pricing of two new dollar-denominated Reference Notes on Thursday.

Freddie Mac's 3.75% $3 billion 10-year Reference Notes due March 27, 2019 priced "close to talk" at 99 bps over 10-year Treasuries and "immediately tightened by 3 bps," the trader said.

The issue priced at 99.727 to yield 3.783%.

According to the trader, Freddie Mac's 1.625% $5 billion two-year Reference Notes due April 26, 2011 was "highly oversubscribed" and priced as expected.

The issue was priced at 99.953 to yield 1.648%, or 71 basis points more than two-year Treasuries, said Freddie Mac.

The new 10-year Reference Notes were offered via a syndicate of dealers headed by Barclays Capital, Inc., Citigroup Global Markets, Inc. and J.P. Morgan Chase.

Freddie Mac's two-year Reference Notes were offered through a syndicate of dealers headed by Banc of America Securities, Credit Suisse and RBS Greenwich Capital.

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