Donald Trump wants to break the Arabs record. The largest offer in the history of the stock market may apply to mortgage giants
Later this year, there may be a public offer of Fannie Mae and Freddie Mac, Giants of the American mortgage market, under federal supervision. Revenues from the offer would reach up to $ 30 billion, informs “The Wall Street Journal”.
Last Friday, “The Wall Street Journal” was the first to report that the administration of President Donald Trump is preparing for the sale of the Higher Market Giant Fannie Mae and Freddie Mac this year. As part of the public offer, according to people familiar with the case, the government has a chance to raise about $ 30 billion at the valuation of both companies at least $ 500 billion.
According to Dziennik, the bosses of the largest American investment banks such JP Morgan, Goldman Sachs, Bank of America, Citigroup, Morgan Stanley and Wells Fargo have met in recent weeks with President Trump to discuss plans for Fanna and Freddie. Treasury Secretary of Scott Bessent, Secretary of Trade Secretary of Howard Lutnick and Bill Pulte, i.e. the director of the Federal Housing Finance Agency, who supervises Freddie and Fannie on the part of the federal administration were also to appear at the meetings.
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The debate is still on whether the mortgage giants will enter the stock exchange as two separate entities or as one combined company. The president is still considering all sales options from 5 percent. up to 15 percent shares of both companies. If the option with one connected entity came into the game, and the market was collected by the $ 30 billion set up by the cited official, the record of the first public offer in terms of its value would be broken.
It could be a record IPO
On global stock markets, the largest IPO has been conducted in 2019 by Saudi Arabia, which sold 1.5 percent. Saudi Aramco, collecting $ 25.6 billion from the market. The other in terms of IPO was the offer of Chinese Alibaby from 2014 ($ 21.8 billion), and the third of the Japanese softbank from 2018 ($ 21.3 billion). As for American companies, only 6th place is Visa, which in 2009 collected $ 17.4 billion. It is overtaken by the AIA Group recorded in Hong Kong, which in 2010 obtained $ 17.8 billion before her debut. and Japanese NTT Mobile Network, which in 1998 collected as much as $ 18.1 billion.
I wrote about plans to re -make Donald Trump to Fannie Mae and Freddie Mac a few months ago in the article “In the USA they want privatization of state giants”, citing an interesting history of both companies. Let us remind you that in terms of assets are one of the largest companies in the world. Their shares are currently the subject of trading on the over-the-way market (OTC, over-the-current), where after Friday's reports “The Wall Street Journal” gained value of about 20 percent.
Their publication is part of the narrative about the privatization of other state -owned companies, which he supported as the president's advisor and head of the state performance department (Dodge) Elon Musk. “We should privatize everything possible,” said Morgan Stanley billionaire at this year's Investment Bank's conference, referring in particular to those associated with the government, such companies as Postal Service Postal Service and the Amtrak passenger railway operator.
Already in May, President Trump announced on Truth Social that the right moment came to their debut on the stock exchange, because both companies “are doing very well, generating large amounts of cash.” He added that the US government would keep its guarantees. It is worth recalling that the plan for reprivatizing these companies already had Trump in its first term, but it did not take place by changing the host in the White House.
It's a return, not a debut on the stock exchange
The state has privileged shares in these companies, exercising full control. The main goal of Fannie Mae and Freddie Mac is to increase the availability of mortgage loans and support liquidity. They buy mortgage loans from lenders, such as banks, combine and pack as guaranteed securities secured with mortgages (MBS – Mortgage -Backed Securities), which can be sold to investors.
“The American mortgage market has been stable in recent years. Although Fannie Mae and Freddie Mac have been very different from the companies that have recently entered the IPO market, the accumulated demand for new shares can be a factor conducive to their quotations,” said Angelo Bochnis from Renaissance Capital, quoted by Reuters, an analytical company focusing on ETFs and market IPO
Finally, let's add that both companies have already been recorded on Wall Street. Fannie Mae was created in 1938 as part of the New Deal Franklin D. Roosevelt program, initially as a government agency. In 1968 she was privatized and entered the stock exchange. Freddie Mac was founded in 1970 to create a competition for Fannie Mae on the secondary mortgage market, and debuted on the stock exchange in 1984.
During the financial crisis in 2008, caused mainly by the rupture of the high -risk mortgage loans (subprime) in the USA, both institutions have suffered huge losses. The United States government took control of them and joined them with $ 188 billion to prevent them from falling. Federal Housing Finance Agency – FHFA in 2010, they ceased to be listed companies, in 2012, in 2012, they regained profitability and repaid all loans received from the federal government by 2017.
Michał Kubicki
