October 14, 2011   12 notes

U.S. government eyes risk-sharing in housing bonds


Fannie Mae and Freddie Mac buy mortgages from lenders to free up cash for banks to make more loans. The two companies then repackage the loans for sale to investors as securities and charge fees to guarantee the debt.Under the private-sector risk-sharing idea, they would begin to issue some bonds without a federal guarantee.Investors in those securities would receive a higher return to compensate them for the greater risk of losses, according to the people familiar with the matter. The Wall Street Journal first reported on the possibility on Friday.The idea is just in the concept stage. The administration could consider a variety of ways to get investors to take on more credit risk, one source said.The administration and housing regulators are eyeing the possibility of using derivatives or relying on greater mortgage insurance coverage for the loans underlying the bonds to spur private-sector interest, according to the sources.Any final plan on investor risk sharing would require the approval of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.The Obama administration would like to begin testing ideas to bring in greater private-sector involvement as early as next year, the sources said.The approach under consideration would reduce the long-term risk exposure of Fannie and Freddie. Together with the Federal Housing Administration, the companies now fund roughly 90 percent of all new U.S. mortgages.FHFA’s acting director, Edward DeMarco, said in a speech last month that his agency is considering various alternatives to attract private investors to the market through different types of risk-sharing structures.

October 14, 2011   75 notes

UK-France power cable capacity to fall during work


Capacity on the 70 kilometre cable has been reduced to 500 MW for a few weeks due to a problem during engineering works to replace a valve.The subsea cable is jointly owned by UK network operator National Grid and French counterpart RTE.

October 12, 2011   18 notes

UPDATE 1-Yields on Colombian peso bonds rise at auction


In the second to last auction of the year, rates on benchmark TES bonds maturing in August 2026 fell to 7.65 percent compared with 7.749 percent in the previous auction on September 28.Paper due in October 2015 sold at a yield of 6.245 percent, down from 6.267 percent at the last auction. Bonds maturing in October 2018 sold at a yield of 6.957 percent, decreasing from 6.967 percent at previous auction.”Market conditions have become much more favorable since the last auction, which is the main reason for higher bond prices. People had been a little nervous about the long end of the curve, said Daniel Lorenzo, a fixed income analyst at Serfinco brokerage.”Also, investors are taking advantage of the fact that there are fewer opportunities to buy bonds,” he said.The Finance Ministry said it issued 300 billion pesos ($156.7 million), with total demand reaching 1 trillion pesos ($522.5 million).The last bond auction of the year was scheduled for Oct. 26, when the final 300 billion pesos of the 28 trillion pesos ($14.6 billion) of government debt to be issued this year will be on offer.