Yesterday's $675 million Federal National Mortgage Association offering helped bring to more than $3 billion the amount of step-up paper issued by federal agencies in the past six weeks, one syndicate member said.

While the step-up structure is not new, agencies only began using the structure in the past month or so according to Deke Iglehart, a senior vice president at First Tennessee Bank Memphis N.A., which co-led Fannie Mae's deal with Goldman, Sachs & Co. and Merrill Lynch & Co.

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