debt offerings that Fannie Mae and Freddie Mac brought to market last week.

But investors have not been as hungry for mortgage-backed securities.

"We have seen reduced buying of mortgage-backed securities and much wider mortgage-backed securities spreads," said Arthur Q. Frank, director of fixed-income research for Nomura Securities International.

Last Wednesday the current coupon mortgage pass-through security was at a spread of 171 to the 10-year Treasury -- its widest in 1999, he said. In mid-May the spread was 118 basis points.

Meanwhile, mortgage bankers have felt a slowdown, especially in the fixed-rate business. "Volumes have slowed dramatically in the last month," especially with fixed-rate refinancings, said Jon E. Korpela, senior vice president for secondary marketing at Banknorth Mortgage Co. in Brattleboro, Vt.

For investors shying away from mortgage-backed securities, the substitute product has been corporate and asset-backed securities, said Mr. Frank. But in recent days, investors have also started to look to Fannie and Freddie's noncallable debt offerings, which are viewed as higher-yielding Treasury sur-rogates.

On Wednesday Fannie Mae came to market with a $3 billion, five-year Benchmark note. The same day it also priced a $500 million reopening of a 30-year, $1.5 billion Benchmark bond first brought to market in May. On Thursday Freddie Mac reopened a three-year issue and a 10-year issue for $2 billion each, as part of its Reference note program.

The Treasury Department's announcement last week that it would reduce its issuance and buy back some of its debt should also help Fannie and Freddie, analysts said.

Fannie and Freddie's programs could become "the new reference and benchmark notes for the financial markets," said Thomas O'Donnell, an analyst for Salomon Smith Barney.

But investors saw a downside in the Treasury's announcement. They sold off shares of the stocks in response to a widening in spreads between Treasuries and agency debt.

Wider spreads make it more expensive for Fannie and Freddie to raise funds.

"With this massive widening in spreads, there is more interest developing in the market" for agency noncallable bullet securities, said Edward I. O'Brien, senior vice president and manager of federal agency trading at Prudential Securities. Last Thursday Mr. O'Brien said there was "very good interest" from a variety of investors in Freddie's three- and 10-year reopenings.

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