WASHINGTON In an annual meeting with Asian investors, Fannie Mae last week touted as a boon to investors its voluntary pledge to augment its capital base, increase disclosures, and issue subordinated debt.
The voluntary capital enhancement and disclosure measures we announced last month highlight Fannie Maes exceptional financial strength and should serve to solidify our standing with international investors as one of the most well-managed financial institutions in the world, said Timothy Howard, Fannies chief economist.
The pledge came out of a deal Freddie Mac and Fannie Mae made in October with Rep. Richard H. Baker, R.-La., who led a campaign this year to tighten regulation of the government-sponsored agencies. The GSEs will publicly disclose the results of interest rate risk sensitivity analyses once a month and the results of credit risk sensitivity analyses quarterly.
Fannie said that under the voluntary measures it will issue sufficient publicly traded, externally rated subordinated debt at least twice a year to bring the sum of its core capital and outstanding subordinated debt to a minimum of 4% of on-balance-sheet assets by the end of a three-year phase-in period. It also committed to maintain three months worth of liquidity in order to reduce the possibility that its operations would be disrupted during a major financial crisis.
At the meeting with Asian investors, Fannie Mae said international investors have bought more than one-third of the benchmark debt securities the company has issued since it began the benchmark program in 1998. Asian investors have bought 14%.
Fannies benchmark program imitates the way the government sells debt, with a full range of maturities and a set schedule. It has issued $179.7 billion in noncallable benchmark notes and bonds since the programs inception.