(Recasts, adds underwriter quotes, distribution, updates
NEW YORK, July 9 Fannie Mae FNM.N FNM.P
sold its first three-year benchmark notes since April on
Thursday, drawing robust domestic investment and paying a risk
premium to Treasuries sharply lower than the prior offering.
The $4 billion 1.750 percent issue was priced at 99.926 to
yield 1.775 percent, or 32 basis points over comparable U.S.
Thursday afternoon, the yield spread had been reduced to
31.5 basis points, said Michael Graf, managing director and
head of agency trading at joint lead manager Barclays Capital.
A combination of lower net issuance and aggressive
purchases of agency securities by the Federal Reserve have
slashed yield spreads throughout this year.
In April's sale of the same amount of the same maturity,
the notes yielded 1.918 percent or 74 basis points over
The prior three-year sale, for $6 billion in January,
yielded 2.006 percent for a 83 basis-point spread.
In June, Fannie Mae opted to skip both of its issuance
windows for the first time this year, so Thursday's sale was
the first since a $5 billion five-year deal in May.
Fannie Mae said 70.4 percent of the new notes were sold to
investors based in the United States, 17 percent in Asia and 4
percent in Europe and the 8.6 percent to other regions.
Fund managers bought 41.2 percent of the issue, central
banks took 26.4 percent and commercial banks 23.4 percent of
"There has been tremendous domestic demand all year long,"
Graf said. "Investors have increased allocation to the product
because there has been price stability and cash at hand to be
Banc of America Securities and JPMorgan were the other
joint lead managers.
Settlement is July 10.
(Reporting by Caryn Trokie; Editing by Chizu Nomiyama)