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ABP cuts Fannie and Freddie holdings

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  • ABP cuts Fannie and Freddie holdings

NETHERLANDS - The €205bn Dutch civil service pension fund ABP has confirmed it has cut its mortgage-backed securities  (MBS) holdings in US mortgage financiers Fannie Mae and Freddie Mac.

A spokesman confirmed that ABP's total investments in Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Association) MBS currently stands at €8.611bn, down from €11bn at the end of last year.

That said, according to ABP, the investments - which the fund stresses are not equities or bonds - "have the highest possible security and are de facto without risk".

"Fannie Mae and Freddie Mac stand for guarantee, and then there is still the government," the spokesman said.

He added: "The risk on the total investments in the named MBS is virtually detached from the capital position of Freddie and Fannie. If Freddie and Fannie collapse then the underlying securities will still remain intact."

Earlier this month, the Swedish media reported that Swedish state pension funds lost a total of SEK500m (€53m) last year as a result of the difficulties of Freddie Mac and Fannie Mae.

On Friday, news reports stated that Freddie Mac is considering selling up to $10bn (€6.3bn) in stock.

The company issued preliminary filings with the Securities and Exchange Commission to raise $5.5bn in capital, in fulfilment of a promise to the regulator.

Earlier this month, the US government was forced to pledge assistance to Freddie and Fannie, which command just under half of the $12trn in outstanding mortgage debt, after concerns they might run out of capital as a result of tumbling house prices.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
 

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