Freddie Mac (FRE), the country’s second largest government-sponsored mortgage-finance firm, posted a smaller-than-expected loss and announced plans to raise $5.5 billion in capital. Stock up 6% in pre-market. This supports the argument that the worst of credit crisis is past. (And now on to the economy itself…)
Freddie lost $0.66 per share, well ahead of consensus of $0.84. Bloomberg:
Chief Executive Officer Richard Syron said in a statement the quarter was “better” than the previous two periods as expenses declined, the company boosted market share and revenue rose to $1.53 billion. Freddie Mac and Fannie Mae agreed to raise capital to overcome losses from loan delinquencies. Fannie Mae, Freddie Mac’s bigger competitor, last week posted a larger-than-expected $2.19 billion loss for the quarter and raised $6 billion.”Freddie Mac on the whole had a better first quarter than what we experienced in the third and fourth quarters of last year,” Syron said in the statement.
The government sponsored enterprises own or guarantee almost half of the $12 trillion in U.S. residential mortgages outstanding. The worst housing market since the Great Depression, caused Freddie Mac’s fair value of assets to drop to negative $5.2 billion from $12.6 billion in the previous quarter. Fannie Mae’s assets fell to $12.2 billion from $35.8 billion in the period.
Freddie Mac shares are down roughly 63% for the year.