Fannie Mae has created a calendar for its 2000 debt issuance program, and its securities may now be on their way to becoming a benchmark at the expense of Treasurys.
The calendar is the first time Fannie Mae has placed its benchmark notes and bonds on a fixed-schedule. The company hopes that by doing so, it will give investors the chance to develop strategies to incorporate Fannie Mae securities into their portfolios.
"Fannie Mae's commitment to issue benchmark notes and bonds across the yield curve according to a fixed schedule starting in 2000 will provide investors around the world with the knowledge they need to plan ahead and take full advantage of these proven, highly liquid securities," said Linda Knight, Fannie Mae's senior vice president and treasurer. "In particular, we believe this calendar will help facilitate a deeper term repo market for benchmark notes and bonds."
The current benchmark, the U.S. Treasury bond, has seen a decline in issuance recently, mainly due to the increasing budget surplus. "Some private companies, including us, have stepped forward to meet the demand by major investors for enhanced liquidity," said a Fannie Mae spokesman. "So what we're doing essentially with our benchmark is we're providing that service, offering interested parties and investors around the world enhanced liquidity, or a liquidity alternative to Treasurys in a time when the issuance of Treasurys is declining because of the budget surplus."
According to the calendar, Fannie Mae will issue five-year and 10-year bullet benchmark notes five times in the year 2000. Two- or three- year benchmark notes will be issued four times. Two seven-year and two 30- year benchmark notes will also be issued in 2000. The two-, three-, seven- and 30-year benchmark notes could also have additional issuance, depending on the demand.