Freddie Mac about to issue stocks by Silvia Szarkova

Freddie Mac, a government based mortgage financier giant, took a few steps towards issuing new stocks, both common and preferred to survive the unwilling situation on stock market. On Friday, the Securities and Exchange Commission accepted its registration filled earlier in the day.

This step follows the Fannie Mae, government based paired company. Freddie plans to raise at least 5.5 billion dollars to overcome the confusion in the market, in comparison to Fannie Mae, which raised 7.4 billion dollars earlier this year. Both companies have had to deal with the huge hit as a result of down turning tendency of United States' economy and especially, mortgage market, but Freddie's stocks have been waiting to acceptation, as its stocks is not yet registered by the Commission.

In a statement released by Freddie Mac, it is ensuring that further details of issuing will depend on current market situation. "We have committed to raise $5.5 billion of new core capital through one or more offerings, which will include both common and preferred securities," it is written in the statement. "The timing, amount and mix of securities to be offered will depend on a variety of factors, including prevailing market conditions, and is subject to approval by our board of directors."

Although, the new taken steps should particularly help to Freddie, it warns that issuance of new preferred or common stocks may be harmful to old stockholders and may bring more inconvenience in the future that can additionally affect the future value of existing stockholders. Freddie also says, it is possible that they will not be able to raise the capital in the future when it will be needed.

Shares of Freddie Mac rose 85 cents, what is the same as 10.2 per cent, finishing at 9.18 dollars on Friday.


related story: http://news.yahoo.com/s/ap/20080718/ap_on_bi_ge/freddie_mac_capital;_ylt=Aq_SZ7IpnAFc4Is0tS8gmLCs0NUE

by Silvia Szarkova for PocketNews (http://pocketnews.tv)

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posted by Lucia Adamova