Greenwich Capital Markets is the newest addition to Freddie Mac's 10-year reference note underwriting group, according to agency desk co-head Scott Graham. The firm was included in the underwriting group announced last Monday, which also included joint lead managers Merrill Lynch and Morgan Stanley. Jerome Lienhard, senior v.p. of investment funding at Freddie Mac, did not return a phone call seeking comment. An agency pro at a competing primary dealer says both Freddie and Fannie Mae tend to heavily scrutinize a dealer before admitting them to their selling groups, both of which contain 10 members. Potential managers are evaluated on their agency bond trading volume and research, capital base, the experience level of their agency team and trading volumes in related products, such as Treasuries and mortgage-backed securities.
The lead manager role has usually been reserved for GCM's larger, more well-capitalized competitors such as Goldman Sachs, Credit Suisse First Boston and Bear Stearns. The GCM agency effort started in January, 2001, led by co-heads Shrikant Ramamurthy and Graham, who joined the firm from Prudential Securities, after that firm shut its fixed-income group. The group now has six professionals. Graham continues that GCM is also working with Fannie Mae to be included in its benchmark notes program manager group.
Last Thursday's $2 billion sale was a re-opening of the $7 billion 5.125% of '12 issue and was being talked at 75-76 basis points over Treasuries. The deal was initially sold by J.P. Morgan Securities, Goldman Sachs and Salomon Smith Barney in mid-July. Graham reasoned that the sale would go smoothly given the well-documented recent pullback in agency spread levels, both on an absolute basis versus Treasuries, and in comparison to swaps and corporate bond spreads, making the sector attractive to relative value players.