Concerned about Fannie Mae's and Freddie Mac's prospects, Asian investors suggest that they will not purchase Fannie Mae or Freddie Mac securities without an explicit U.S. Government guarantee that those securities would be paid. This development is one indication that the proverbial rules of the global financial game are changing. In the post-U.S. housing bubble world, U.S. securities will likely be viewed as riskier than they were in the past. That could have long-term implications for financing from abroad for U.S. companies and the U.S. government.
Bloomberg.com: ExclusiveAsian investors wonít buy debt and mortgage-backed securities from Fannie Mae and Freddie Mac until they carry explicit U.S. guarantees, similar to those given on bonds issued by Bank of America Corp. or Citigroup Inc.
The risks are too great without a pledge that the U.S. will repay the debt no matter what, according to Hideo Shimomura, chief fund investor in Tokyo for Mitsubishi UFJ Asset Management Co., and other bondholders and analysts in Japan, China and South Korea interviewed by Bloomberg. Overseas resistance may hamper U.S. efforts to hold down home-loan rates and rebuild the nationís largest mortgage-finance companies.