 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Procedures
Callable Debt Redemption Policy
Fannie Mae callable debt typically has one of three call features:
- American -- the issue can be called on the call date or any time thereafter.
- European -- the issue can be called only on the call date.
- Bermudan -- the issue is usually called on coupon payment dates on or after the call date.
When a Fannie Mae callable debt issue has reached its call or redemption date, Fannie Mae generally can call the issue in whole or in part. Fannie Mae generally calls its securities issues in whole.
In the case of an issue that is callable at Fannie Mae's option, when Fannie Mae determines that the issue should be called, Fannie Mae gives notice in the manner set forth in the terms of the securities. Additionally, Bloomberg generally posts notification information regarding called
Fannie Mae debt securities that it receives from the wire services. All call notifications are also posted on our website.
In 1996, the time between when notice of a call is given and when principal redemption is made was reduced from a minimum of 30 calendar days to 10 calendar days. This reduction does not apply to Fannie Mae callable debt issued prior to April 1, 1996.
It is Fannie Mae's general practice to redeem principal on a business day (as defined in the terms of the applicable securities). An exception is if the interest payment date is on a nonbusiness day and a call date falls on this same day - then the bond may be called on that day. This follows standard industry practice. In such cases, the redemption payment is made on the next business day.
Interest on the principal amount redeemed is paid up until the date fixed for the redemption. If payment is delayed because the date fixed for redemption is not a business day, additional interest on the principal amount redeemed is not payable as a result of the delay. Of course, the terms of any particular issue of securities are governed by the applicable documents establishing such terms and may differ from the above information.
Foreign Currency Denominated Global Security Settlement Procedures
Settlement procedures on Fannie Mae foreign currency denominated debt vary slightly from that of U.S. dollar denominated debt. These variations include the use of a clearing agent other than the Federal Reserve, selection of a foreign fiscal/paying agent, modification to the usual minimum initial and incremental bond investment amounts, potential registration of the bonds, and if appropriate, listing of the securities.
The Federal Reserve Clearing system, which Fannie Mae uses for its U.S. dollar debt securities, is not able to process foreign currency denominated transactions. Consequently, Fannie Mae has established relationships with other clearing agents. To date, Fannie Mae's foreign currency transactions have cleared through DTC (Depository Trust Company) for investors in the United States, and for overseas investors through Euroclear or Clearstream (formerly Cedelbank) as well as certain other agents that are indigenous to a particular currency's home market.
At the time of issuance, Fannie Mae will adjust the minimum initial and incremental debt denominations in accordance with the currency in which the debt is being issued and the conventions that govern that market. In so doing, Fannie Mae is mindful of the operational procedures preferred by its investors. This flexibility is of particular importance to retail investors who are more constrained by bond denomination restrictions.
Fannie Mae foreign currency debt securities may be listed or unlisted depending on the currency in which the security is denominated, market conventions, and investor preferences. Fannie Mae's Universal Debt Facility has a Luxembourg listing option that is available to Fannie Mae on each Universal Debt Facility issue. To date, Fannie Mae has issued its non-dollar securities only in fully or targeted registered form (as we are prohibited from issuing securities in bearer form).
An investor purchasing a foreign currency denominated debt security will follow a process similar to that of a U.S. dollar purchase. The investor delivers funds, denominated in the issue currency, to their dealer. The investor will then receive scheduled interest and principal payments denominated in the currency specified by the terms and conditions of the issue. Payments are made to the investor via Fannie Mae's authorized fiscal agent, usually Chase Manhattan Bank. As with domestic currency issues, Fannie Mae's nondollar securities can be accessed on Bloomberg using the issue's CUSIP number, ISIN, or common code.
|
|
Last Revised: March 07, 2006
|
|
|
|
|
This document is for information purposes
only. It is neither an offer to sell nor a
solicitation of an offer to buy any Fannie
Mae security. Fannie Mae securities are offered
only in jurisdictions where permissible by
offering documents available through qualified
dealers. Securities issued by Fannie Mae are
not guaranteed by the United States and do
not constitute a debt or obligation of the
Unites States or of any agency or instrumentality
thereof other than Fannie Mae. All statements
made herein are qualified in their entirety
by reference in the applicable offering documents.
Securities discussed herein may not be eligible
for sale in certain jurisdictions or to certain
persons and may not be suitable for all types
of investors. An offering only may be made
through delivery of the Offering Document.
Investors considering purchasing a Fannie
Mae security should consult their own financial
and legal advisors for information about such
security, the risks and investment considerations
arising from an investment in such security,
the appropriate tools to analyze such investment,
and the suitability of such investment in
each investor's particular circumstances.
|
|
|
|
