THE INTERNATIONAL CAPITAL MARKETS DISCOVER MAIN STREET
The Federal National Mortgage Association will probably borrow $20 to $25 billion of long-term funds this year a finance its operations as America's largest purchaser of home mortgages. Depending on market conditions, about $2 billion of the total may be borrowed overseas, up from $1.2 billion last year.
Fannie Mae, as it is commonly known, has ventured abroad for three main reasons: to lower its cost of borrowed funds, sometimes by as much as 30 to 40 basis points; to obtain somewhat longer maturities than were available domestically, and to diversify its investor base.
For similar reasons, the US housing finance industry in general is increasingly looking overseas to raise much-needed capital.
It is a latecomer to the international capital markets, compared with other major sectors of the US economy. But the pace of its offshore activities seems likely to gather steady momentum, despite the much-publicized problems of the US thrift industry, the recent decline in US interest rates and exchange rate uncertainties.
Indeed, Mark Riedy, president of Fannie Mae, has said it is "absolutely essential" that American housing gains the same ready access to foreign capital markets as other US industries, if it is to satisfy America's growing mortgage needs.