Industry News

Fannie Mae announces massive sale of stock

$5 billion sell-off intended to restore capital to mortgage giant

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Fannie Mae announced Wednesday that it has agreed to sell an aggregate of $5 billion in two placements of preferred stock to qualified institutional buyers, representing the largest capital placement ever undertaken by the mortgage-financing giant. The $2.5 billion series of 5.375 percent Non-Cumulative Convertible Series 2004-1 Preferred Stock has a stated value and liquidation preference of $100,000 per share and is convertible by holders into shares of Fannie Mae common stock at a conversion price of $94.31. Fannie Mae also priced $2.5 billion of Non-Cumulative Preferred Stock Series O with a stated value of $50 per share and is a non-convertible floating rate preferred stock with an original coupon of 7 percent, the entity announced today. The coupon re-prices quarterly at the higher rate of 7 percent and the sum of the 10-year CMT rate plus 237.5 basis points. Lehman Brothers Inc. served as sole placement agent for the transactions. "This placement of preferred stock is a key co...