Bank of China has dumped $4.6 billion of Fannie Mae (FNM) and Freddie Mac (FRE) debt–one-quarter of its holdings–since June, says the FT. And Bank of China isn’t the only one. The Fed says foreign investors have been fleeing from Fannie and Freddie’s debt like extras on the set of a disaster film. FT:
Federal Reserve custody data shows that for the year to July, foreign official and private investors bought an average of $20bn of agency debt a month, including debt issued by other government agencies such as Ginnie Mae and the Federal Home Loan Banks. Purchases of US Treasuries averaged $9.25bn.
From July 16 to August 20, foreign investors sold $14.7bn of agency debt, trimming their overall holdings to $972bn. They purchased $71.1bn of Treasuries in the same period.
But don’t worry. At a Group of 20 meeting of industrialized and developing nations in Brazil this weekend, Treasury officials are expected to plead with foreigners to stop dumping GSE debt. Maybe they can also pass around a hat.