Fannie Prices $7B of Preferred Stock

Fannie Mae has priced a $7 billion offering of 8.25% noncumulative, perpetual, fixed-to-floating-rate preferred stock.The 280 million shares of Series S stock (CUSIP 313586752) have a stated value of $25 per share, the government-sponsored enterprise said. The stock will have a fixed annual dividend rate of 8.25% from the issuance date to Dec. 31, 2010. Thereafter, the dividend rate will reset quarterly, with dividends accruing at 7.75% or the three-month London interbank offered rate plus 4.23%, whichever is greater. Fannie Mae will have the option to redeem all or part of the Series S preferred stock on Dec. 31, 2010, and on each fifth anniversary thereafter, at the redemption price of $25 per share plus accrued dividends. "We saw exceptional investor demand for this preferred offering," said David C. Benson, senior vice president and treasurer. The issuance "completes our previously announced capital raising program," he said. Lehman Brothers and Merrill Lynch & Co. are the joint lead underwriters of this issue. Fannie Mae can be found online at http://www.fanniemae.com.