Agency Market Widens On Accounting Report

The agency bond market widened one basis point by the middle of last week, even as the broader market continued its recent rally, after Fannie Mae's regulator released a report criticizing its accounting practices.

  • 24 Sep 2004
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The agency bond market widened one basis point by the middle of last week, even as the broader market continued its recent rally, after Fannie Mae's regulator released a report criticizing its accounting practices. The Office of Federal Housing Enterprise Oversight said it uncovered a series of concerns that undermine the "overall safety and soundness of the enterprise," including massaging earnings to reach bonus targets and improper hedge accounting.

Fannie's 4 5/8%s of '11, which were 49.75 basis points above 10-year Treasuries on Tuesday, widened to 51.25bps by Thursday morning. However, most of the impact was felt on the equity side, with the price of Fannie shares down 7% Wednesday. "The market is looking at this as Freddie Mac, Part II," said Carl Moerbe, senior agency strategist at Morgan Keegan, referring to the previous accounting investigation into the smaller government-sponsored enterprise.

To add fuel to the fire, the Securities and Exchange Commission is conducting an informal inquiry into the issues raised by the OFHEO report, according to a statement from Ann McLaughlin Korologos, presiding director of Fannie Mae's board of directors.

Officials from Fannie Mae and OFHEO declined comment.

  • 24 Sep 2004

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 BNP Paribas 12,508 23 18.18
2 Bank of America Merrill Lynch (BAML) 8,059 25 11.72
3 Lloyds Bank 5,761 18 8.38
4 Citi 5,606 15 8.15
5 JP Morgan 5,007 7 7.28

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 95,041.28 268 11.13%
2 Bank of America Merrill Lynch 79,274.93 221 9.29%
3 Wells Fargo Securities 69,765.48 197 8.17%
4 JPMorgan 69,438.13 198 8.13%
5 Credit Suisse 57,820.17 147 6.77%