Agency spreads move in, with 30-year unpredictable; Fannie Mae prices $3 billion notes

By Lisa Kerner

Charlotte, N.C., Sept. 23 - Agency spreads opened Friday wider by 2 to 3 basis points, partially impacted by a new issue from Fannie Mae, according to a trader.

By the end of the day, most sectors were in about 0.5 bp on low volume.

The 30-year sector, however, "was all over the place," the trader said.

Agencies had underperformed swaps on Thursday, with the 30-year swap lower than 30-year Treasuries.

Fannie Mae priced $3 billion of new 0.625% three-year Benchmark Notes on Friday at a spread of 28.5 bps over Treasuries on Friday.

The notes were sold at 99.951 to yield 0.641%. Price talk was at a spread of 26.5 bps over Treasuries.

Fannie Mae announced the new issue, due Oct. 30, 2014, on Thursday.

According to the agency, the issue sold primarily in the United States (86.9%), followed by other countries (6.9%), Asia (5.6%) and Europe (0.6%).

Fund managers led the way for investors (76.6%) followed by central banks (12.1%), state/local governments (7.7%), insurance companies (2.3%), commercial banks (1%) and retail (0.3%).

BNP Paribas Securities Corp., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the lead managers. The co-managers include, CastleOak Securities, LP, Deutsche Bank Securities Inc., FTN Financial Capital Markets, UBS Securities LLC and Williams Capital Group LP.

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