Freddie Mac is seeking to reassure holders of its debt that the preferred stock purchase agreement announced by US Treasury secretary Henry Paulson will protect them, "regardless of who wins the elections".
Speaking to a packed auditorium at Euromoney’s Japan Capital Markets Congress on September 24, Timothy Bitsberger, treasurer at Freddie Mac, said that the agreement between the US Treasury and the two government-sponsored enterprises Freddie Mac and Fannie Mae, worth up to $100 billion each, is a "legally binding agreement to protect the owners of debt and mortgages issued prior to and after December 2009". Foregoing the detailed slides and charts that he had used at the previous year’s conference to describe his views on the US housing market, Bitsberger spoke for just 10 minutes of his allotted 50 before inviting questions.
"Conservatorship will ensure business as usual," he said, referring to the appointment of the Federal Housing Finance Agency as steward of Freddie Mac and Fannie Mae. Bitsberger sought to reassure debt investors that Freddie Mac would continue its programme of regular issuance, with the next announcement due in October. When asked in a private interview after his speech about what effect his company’s recent difficulties might have on the cost of that debt funding, Bitsberger told Euromoney: "What’s important to us is the spread between our debt and the mortgages we buy.