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Fannie Mae: A surrogate supranational?

Aside from the odd foray into the yen market, Fannie Mae has always been a devout US dollar issuer. But, since the start of 1997, something has changed. Of the 11 international bonds the US agency has issued this year, only three have been in its home currency. Does this signal a definite shift in Fannie Mae's borrowing strategy?

The first non-dollar deal this year was a successful £1 billion (US$1.67 billion) global in February, which heralded the resurgence of sterling as an international debt market.

But it is the issues of the past two months that have caused some to wonder whether Fannie Mae is beginning to promote itself as a surrogate supranational, issuing in new or illiquid currencies to boost the currency in the debt markets.

In the first week of June the agency brought a NZ$500 million (US$345 million) global. There have been over 30 issues in New Zealand dollars so far this year, but Fannie Mae's is only the second global. The first was a NZ$250 million issue from the World Bank way back in 1990. Few New Zealand dollar issues are for more than NZ$100 million. The lack of paper in the market helped Fannie Mae.

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