Raines said that the 2003 Benchmark Calendar (a copy is attached) will help Fannie Mae meet three top corporate priorities. First, it will boost the clarity, predictability and liquidity of Fannie Mae's Benchmark Securities(TM). Second, the calendar will further advance Fannie Mae's leadership in Corporate America for financial transparency and disclosures. Third, it will help Fannie Mae meet American home buyers' growing demand for low-cost mortgage capital and support the robust U.S. housing market.
In conjunction with the company's 18th annual investor visit to Asia, Raines today paid tribute to area investors for their strong participation in the Fannie Mae's Benchmark Notes program. Since 1998, international investors have purchased 33 percent of all Benchmark Notes(R) and Benchmark Bonds(R) issued, with the largest share, 14 percent, going to Asian investors. In addition, Asian investors have been particularly strong participants in Callable Benchmark Notes(R) since their July 2001 inception.
"Both noncallable and callable Benchmark debt securities help Fannie Mae supply the needed capital that lenders require to support one of the strongest growth markets in the U.S. economy - housing," Raines said. "Asian investors benefit from the high-credit quality, liquidity and transparency that Fannie Mae's debt securities offer."
"The key to the success of Benchmark Securities is Fannie Mae's commitment to consistent and regularly scheduled offerings, price transparency and demonstrated liquidity through sizing transactions to market interest," Raines said. "The 2003 calendar defines our funding schedule and now includes announcement, pricing and settlement dates for both noncallable and Callable Benchmark Notes," Raines said. "This provides a greater degree of predictability and clarity to the marketplace."
The distribution of the calendar is designed to better assist investors and other market participants in their ongoing investing, trading, hedging and financing strategies. This year, with respect to noncallable Benchmark Notes, Fannie Mae announced maturities ranging from 2 years to 10 years and eliminated the 30-year Benchmark Bond for 2003. Other features of noncallable Benchmark Securities include:
-- New issue minimum sizes of $4 billion
-- Reopening sizes dependent upon investor demand and Fannie Mae's funding needs
-- Use of traditional underwriting syndicate to bring new issues and reopenings to market
Since the inception of the Benchmark Securities program, Fannie Mae has issued 53 long-term Benchmark Notes and Benchmark Bonds as well as 39 re-openings for a total of $311.5 billion. Raines noted that international investors have been central to the program's success as an important source of liquidity across the yield curve, and said he expects the interest to continue.
In addition to the international investor participation in Fannie Mae's noncallable Benchmark Securities, the company has issued $28.25 billion in Callable Benchmark Notes in 18 different issues, and many new institutional investors - both domestic and international - have participated.
Since the launch of the Callable Benchmarks initiative in July 2001, Asian investors purchased 37 percent of the three-year securities, noncallable for the first year (3NC1); 29 percent of the five-year securities, noncallable for the first two years (5NC2); and 13 percent of the 10-year securities, non-callable for the first three years (10NC3).
Fannie Mae recently announced enhancements to Callable Benchmark Notes that include increased minimum new issue sizes to $2 billion from $1 billion. Minimum reopening sizes remain $500 million. Fannie Mae will issue one or two Callable Benchmark Notes structures each month with maturities and call lockouts to be determined through market feedback. All Callable Benchmark Notes will continue to have one-time (European) calls. Brochures and fact sheets explaining these securities have recently been translated into Chinese.
Raines said that one of the most important factors to providing value to Asian investors is transparency. Two years ago, long before the current focus on corporate disclosures, Fannie Mae implemented a set of six voluntary financial disclosure initiatives that placed the company at the vanguard with respect to liquidity, transparency and market discipline. The company also announced that it would voluntarily register its common stock with the Securities and Exchange Commission (SEC) in 2003, which will permanently require the company to file its periodic disclosures to the SEC.
"Fannie Mae is fully committed to being a global leader in the forefront of transparency, accountability, and best-in-class corporate governance practices. One example of the company's increased transparency is its comprehensive 2003 Benchmark Calendar," Raines said.
Along with the comprehensive Benchmark Calendar announcement and the SEC registration of its common stock, Fannie Mae also was one of the first U.S. corporations to certify its periodic financial disclosures and recommend to its Board of Directors that the company begin expensing all stock-based compensation as part of its ongoing commitment to be a leader in corporate transparency and disclosure.
"Fannie Mae long provided best-in-class disclosure through its annual report, quarterly reports, proxy, monthly reports of business activities, quarterly investment analyst packet, and additional materials on its Web site," Raines said. "In addition, by voluntarily registering Fannie Mae's common stock with the SEC, Asian investors in Fannie Mae's debt securities will benefit from the mandatory corporate disclosures."
Raines said the increased financial disclosures and flexibility, liquidity and transparency in Fannie Mae debt securities will help the company meet the surge in consumer demand for housing capital. He said that U.S. will have more people to house, with the population growing by as many as 34 million people by the year 2010; that Fannie Mae expects homeownership rates to continue rising; that American homes should continue to appreciate; and that the historic trend of homeowners increasing how much their home value is financed is likely to continue.
"Indeed, 2002 is shaping up to be another big year for housing, a record year for home sales and we forecast nearly $2.5 trillion in mortgage originations, which will be a new all-time high," Raines said.
Although U.S. housing is solid and the outlook for the rest of the decade looks solid as well, many speculate about whether home prices will remain strong. "Year-after-year, home prices for the U.S. as a whole have never actually fallen at any time over the past 25 years," he said.
Raines said that with mortgage rates now at 40-year lows, housing affordability is as good as it has been in three decades. "Even if mortgage rates were to increase 200 basis points, affordability would remain at high levels," he said. "It would take extremely high mortgage rates, approaching double digits, to significantly adversely affect affordability."
Raines said that technology has made the mortgage process faster, easier and less expensive; the inventory of unsold homes remains at near record lows; and housing prices are now just catching up with the growth in income. "All of these factors," he said, "are allowing more Americans to reach the American Dream of homeownership."
Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided over $4 trillion of mortgage financing for 47 million families. More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.
Benchmark Notes and Benchmark Bonds are registered marks, and Benchmark Securities is a trade mark of Fannie Mae. Unauthorized use of these marks is prohibited. This announcement is neither an offer to buy nor a solicitation of offers to sell one of these securities.
Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."
This release includes certain forward-looking statements based on management's estimates of trends and economic factors in the markets in which the company is active as well as the company's business plans. Such estimates and plans are subject to change without notice. Future results may vary from results expected by the company if there are significant changes in economic conditions, regulatory or legislative changes affecting Fannie Mae, its competitors, or such markets, or changes in other factors. Please review our Information Statement for more information on forward-looking statements.
The securities may not be offered or sold or made the subject of an invitation for subscription or purchase nor may any offering materials in connection with the offer or sale, or invitation for subscription or purchase of such securities be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (1) to an institutional investor or other person falling within Section 274 of the Securities and Futures Act 2001 (Act 42 of 2001) of Singapore (the "Securities and Futures Act") (2) to a sophisticated investor (as defined in Section 275 of the Securities and Futures Act) and in accordance with the conditions specified in Section 275 of the Securities and Futures Act or (3) otherwise than pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.
Year 2003-- 3- and 6-month Benchmark Bills are auctioned on a weekly basic, and the 1-year Benchmark Bills are auctioned on a biweekly basis.
Benchmark Securities Issuance Calendar
January February March
A P S A P S A P S
3/6-month Bills Weekly Auction Weekly Auction Weekly Auction
1-year Bills Biweekly Action Biweekly Action Biweekly Action
2/3-year
noncallable
Notes 21st 27th 28th
5-year
noncallable
Notes 3rd 8th 10th 21st 26th 28th
10-year
noncallable
Notes 21st 26th 28th
Callable
Benchmark Notes 17th 23rd 27th 10th 13th 18th 10th 13th 17th
April May June
A P S A P S A P S
3/6-month Bills Weekly Auction Weekly Auction Weekly Auction
1-year Bills Biweekly Action Biweekly Action Biweekly Action
2/3-year
noncallable
Notes 21st 24th 25th 16th 19th 20th
5-year
noncallable
Notes 16th 21st 23rd
10-year
noncallable
Notes 16th 19th 20th
Callable
Benchmark Notes 7th 10th 14th 12th 15th 19th 9th 12th 16th
July August September
A P S A P S A P S
3/6-month Bills Weekly Auction Weekly Auction Weekly Auction
1-year Bills Biweekly Action Biweekly Action Biweekly Action
2/3-year
noncallable
Notes 15th 20th 22nd
5-year
noncallable
Notes 18th 23rd 25th 19th 24th 26th
10-year
noncallable
Notes 19th 24th 26th
Callable
Benchmark Notes 7th 10th 14th 4th 7th 11th 8th 11th 15th
October November December
A P S A P S A P S
3/6-month Bills Weekly Auction Weekly Auction Weekly Auction
1-year Bills Biweekly Action Biweekly Action Biweekly Action
2/3-year
noncallable
Notes 17th 22nd 24th 12th 17th 19th
5-year
noncallable
Notes 14th 19th 21st
10-year
noncallable
Notes 12th 17th 19th
Callable
Benchmark Notes 6th 9th 14th 7th 13th 17th 8th 11th 15th
A = Announcement Date P = Pricing Date S = Settlement Date
-- Minimum new issue size for 3-month Benchmark Bills is $4 billion, or 6-month Benchmark Bill is $1.5 billion and for 1-year Benchmark Bills is $1.0 billion
-- Minimum new issue size for noncallable Benchmark Notes (2 years - 10 years in maturity) is $4.0 billion.
-- Minimum new issue size for Callable Benchmark Notes (any structure) is $2.0 billion.
