NEW YORK (Reuters) - Heightened expectations for a government bailout of U.S. home-funding giants Fannie Mae and Freddie Mac drove their debt prices higher on Thursday as investors bet the securities will be guaranteed by the U.S. government even if shareholders are wiped out.
Shares in the government-sponsored enterprises (GSE), which own or guarantee almost half of all outstanding U.S. mortgages, erased steep early losses to post modest gains by midday, but remain near their lowest levels in nearly two decades.
The GSEs have reported losses for the past four quarters, and rising mortgage delinquencies cut into the value of their assets and capital. However, they meet regulatory capital requirements and are successfully rolling over their debt on the regular schedule, limiting the need for any nationalization by the government.
Shares in the government-sponsored enterprises (GSE), which own or guarantee almost half of all outstanding U.S. mortgages, erased steep early losses to post modest gains by midday, but remain near their lowest levels in nearly two decades.
The GSEs have reported losses for the past four quarters, and rising mortgage delinquencies cut into the value of their assets and capital. However, they meet regulatory capital requirements and are successfully rolling over their debt on the regular schedule, limiting the need for any nationalization by the government.
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Mortgages,
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