Foreign investors grow more concerned over Fannie and Freddie | FT Alphaville

Foreign investors grow more concerned over Fannie and Freddie

Asian and Middle Eastern central banks and sovereign wealth funds are increasingly anxious about the safety of their investments in the debt of Fannie Mae and Freddie Mac, despite the assurances of US government officials, the FT says. Spooked by US political wrangling, major investors including the National Pension Service of Korea and the Kuwait Investment Authority have sold out of their holdings of the debt of the US Treasury-backed housing agencies since the 2008 global financial crisis. Officials from central banks, including the Bank of Japan, say they will be far more cautious in future. “The GSEs [government sponsored enterprises] are not safe,” said one senior official at an Asian central bank, who added that his institution was reluctant to sell its existing holdings because of fears of spooking the market. Investors are also worried that if the Federal Reserve keeps printing money, the value of the debt will fall in terms of their own currency, a calculation that dollar-based investors do not have to make.