Agency REIT’s, The New Version of "Well-Hedged, Safely Leveraged" GSE’s – Nom de Plumber’s Thought of the Day

ndp  Nom de Plumber is a Nom de Plume

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http://online.wsj.com/article/SB10001424127887324763404578431033270347040.html?mod=WSJ_hp_LEFTWhatsNewsCollection
 
“……..The firms say they use interest-rate swaps to hedge against rate swings and have raised more than $30 billion in equity over the past two years…..”

The REIT managers are essentially confident that their interest-rate hedges will also help cover credit-spread, prepayment, basis, regulatory, and liquidity risks. 

Perhaps, they may be overconfident.   Just look at what happened to Fannie and Freddie.

Thank you.

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