The stocks of Fannie Mae and Freddie Mac have been dealt another blow - this time by the Orange County bankruptcy. As a result, at least one analyst is now rating the stocks as "high risk."

The bankruptcy caused the spreads between agency debt and Treasury debt to widen, according to Smith Barney analyst Thomas O'Donnell. Spreads widened as the market anticipated that $10 to $15 billion of agency debt controlled by Orange County would soon be up for sale, Mr. O'Donnell said.

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