Fannie Mae sold $3 billion of debt Tuesday, paying lower yields than government-guaranteed bank bonds and borrowing for less relative to benchmarks than the records set in its last sale.
The five-year benchmark notes were priced to yield 2.906%, or 121 basis points more than Treasuries of similar maturity. Last month the government-sponsored enterprise sold $1 billion of five-year notes at a record spread of about 132 basis points.
Tuesday's sale was Fannie's first offering since Sept. 10 of a new issue maturing in more than a year.
Last week the Federal Reserve Board purchased $5 billion of so-called agency debt under a $100 billion program intended to lower mortgage costs.
Spreads on agency debt — the long-term borrowing of Fannie, Freddie Mac, and the Federal Home Loan Bank System — declined from their all-time highs after the Fed announced plans Nov. 25 to buy the notes and $500 billion of agency mortgage securities.