Fannie and Freddie 'recovering' following debt sale

27 August 2008

Government-sponsored US mortgage firms Fannie Mae and Freddie Mac might not now require a government bailout, despite analysts' previous warnings of the lenders' financial health.

Shares in Fannie and Freddie have now been on the rise for two consecutive days, as industry sentiment improves.

Persistent reports earlier this month had suggested that the lenders - who collectively hold $2.5 trillion of debt, or over half the US market - would be forced to use the unlimited public bailout facility that was recently rushed through congress.

However, it is thought that a sell-off of $2 billion worth of debt from Freddie earlier this week has relieved the pressure, CNBC reports.

Analysts agreeing with this point of view include those at Barclays Capital.

"While press reports have made clear that [Freddie] is having little success raising private capital, it does not seem to be having any difficulty attracting investors," a note from the bank stated.

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