Grading on a Curve
We note with interest Fitch’s decision to give the Fannie risk-share structure – still not fully made public – a BBB. This combined with the pricing difficulties that accompanied Freddie’s risk-share launch last summer—show how hard it will be to construct a viable private market of anything like the GSEs’ size and reach. The structures – admittedly first try risk-shares – also highlight investor obstacles to the first-loss tranche construct in Corker-Warner.
The full report is available to subscription clients. To find out how you can sign up for the service, click here