In accordance with its debt issuance calendar, Fannie Mae will issue at least $10 billion in benchmark debt through three different maturity notes August 2. It will also mark the premiere of a new Internet-based syndication system to monitor the sale.
The system, known as the Benchmark Automated Syndication System (BASS), will link dealers directly with Fannie Mae's system to get near real-time information about the sale.
"It's always been a very manual time-consuming process, whereby we're on the phone a lot with all of the dealers in our syndicate gathering information that help us to determine size, because we size each transaction based on investor demand," said Laura Simmons, director of e-commerce at the treasurer's office at Fannie Mae.
"We'll put out deal summary information to the market [now], where before it was releases via news release - it was slower. This way it's there as soon as we release it on the site for investors to look at and other market participants," she added.
The sale will consist of at least $4 billion of a new two-year issue, a $4 billion reopening of its June 2010 10-year notes, and a $2 billion reopening of its May 2030 30-year notes. At the conclusion of the sale, the total size of the 10-year notes will be $7 billion and the 30-years will total about $4 billion.
"The sizes that were discussed in the marketplace yesterday may not be the ultimate sizes, but we were seeing very strong interest in all those maturities. So given the interest we were seeing," Fannie Mae would list approximate sizes, said John The Losen, vice president of debt marketing for Fannie Mae.
For the BASS system, three of Fannie Mae's dealers will serve as co-leads for the sale: Merrill Lynch, Goldman, Sachs & Co. and Morgan Stanley Dean Witter. They will be able to enter the information directly to the system, via a system-to-system transmission. Simmons said that Fannie Mae is "anticipating that going forward, a majority of our dealers will be hooked up for system-to-system transmission."
"What we're trying to do is improve the flow of information from what we see as end-to-end, because our touchpoint are the dealers, because we don't sell directly to investors," she added.
The two-year price guidance is expected to be flat to the prior two-year issuance at 6 5/8%, while both reopenings will price to market value. "We're seeing very good demand in all of the maturities, especially with this new two-year being a new issue, we've seen tremendous focus there, and a strong focus on the other maturities," The Losen said.