Pimco pumped on Freddie, Fannie debt

Pimco pumped on Freddie, Fannie debt
Pacific Investment Management Co. says investors should buy Fannie Mae and Freddie Mac mortgage-backed securities that slumped in response to planned changes to the government-supported companies' refinancing rules.
NOV 04, 2011
Pacific Investment Management Co. says investors should buy Fannie Mae and Freddie Mac mortgage-backed securities that slumped in response to planned changes to the government-supported companies' refinancing rules. “If you didn't sell them two months ago and you're selling them today, you deserve to be fired,” Scott Simon, the mortgage head at Newport Beach, Calif.-based Pimco, which runs the world's largest bond fund, said today in a telephone interview. The bond fund manager joined analysts at Amherst Securities Group LP and BNP Paribas SA in saying the consequences of an expansion to the Home Affordable Refinance Plan announced yesterday may be less damaging than some investors anticipate. The market slumped yesterday as investors braced for a wave of refinancing amid President Barack Obama's bid to stoke the economy by helping more homeowners cut loan payments. Fannie Mae's 6% 30-year fixed-rate securities declined by almost 0.7 cent on the dollar yesterday to about 109 cents, underperforming Treasuries by the most in 20 months, after the Federal Housing Finance Agency outlined the changes to the HARP program for loans guaranteed by the company or Freddie Mac to borrowers with little or no home equity. The debt, which reached almost 111 cents on Sept. 1, climbed to 109.2 cents as of 11:28 a.m. in New York today, outperforming U.S. government notes, according to data compiled by Bloomberg. Interest rates on the underlying mortgages average about 6.5%, compared with the average rate on new home loans of about 4.2%, according to Bankrate.com data. Pimco boosted mortgage securities to 38% of assets in its $242 billion Total Return Fund in September, the most since January, from 32% the prior month, according to data on the firm's website. Simon declined to say how much of the increase was tied to government-backed agency mortgage securities or other securitized debt. --Bloomberg News--

Latest News

JPMorgan mulls new asset lending scheme aimed at crypto ETF investors
JPMorgan mulls new asset lending scheme aimed at crypto ETF investors

Insiders say the Wall Street giant is looking to let clients count certain crypto holdings as collateral or, in some cases, assets in their overall net worth.

Fintech bytes: Future Capital adds RayJay alum to C-suite, Advyzon welcomes ex-Envestnet leader
Fintech bytes: Future Capital adds RayJay alum to C-suite, Advyzon welcomes ex-Envestnet leader

The two wealth tech firms are bolstering their leadership as they take differing paths towards growth and improved advisor services.

UBS 'wrongfully' fired Idaho advisor in 2021: FINRA panel
UBS 'wrongfully' fired Idaho advisor in 2021: FINRA panel

“We think this happened because of Anderson’s age and that he was possibly leaving,” said the advisor’s attorney.

Cetera Trust hires Fidelity vet Kerri Scharr for chief fiduciary officer role
Cetera Trust hires Fidelity vet Kerri Scharr for chief fiduciary officer role

The newly appointed leader will be responsible for overseeing fiduciary governance, regulatory compliance, and risk management at Cetera's trust services company.

Trump's 'revenge tax' might come back to bite US borrowers, experts say
Trump's 'revenge tax' might come back to bite US borrowers, experts say

Certain foreign banking agreements could force borrowers to absorb Section 899's potential impact, putting some lending relationships at risk.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.