Freddie Mac, the US government-sponsored mortgage company, is to slash its dividend by half and raise $6bn through the sale of preferred stock to shore up its capital base. Freddie is the second large financial institution in as many days to call on new capital to strengthen its balance sheet, after Citigroup on Monday raised $7.5bn from the Abu Dhabi Investment Authority. Freddie Mac’s board declared a Q4 dividend of 25 cents, compared with 50 cents in the third quarter. The company said it needed the $6bn of new capital and the dividend cut – its first since it became a public company in 1989 – to hold on to enough cash to maintain its financial flexibility and satisfy regulators. Last week, Freddie warned it would need new capital as it revealed a $2bn Q3 loss, its largest yet.
