July 18, 2008 / 4:39 AM / in 10 years

Freddie Mac mulling $10 bln share offer - WSJ

July 18 (Reuters) - Mortgage giant Freddie Mac FRE.N is considering raising capital by selling as much as $10 billion in new shares to investors, The Wall Street Journal reported, citing people familiar with the matter.

The main buyers for any new-stock issues are likely to be existing shareholders worldwide, the paper said, citing one person involved in the discussion.

A definitive plan has not yet been determined, the person told the paper.

Shares of Freddie Mac and Fannie Mae FNM.N, the two pillars of the U.S. housing market, have taken a beating this year as the companies face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.

The U.S. Treasury and Federal Reserve have announced a plan to shore up Freddie Mac and Fannie Mae balance sheets and borrowing capabilities, and helped shore up investor confidence.

Together, the companies own or guarantee more than $5 trillion in U.S. mortgages. They have lost more than $11 billion since June, and have predicted more losses to come. (Reporting by Pratish Narayanan in Bangalore; Editing by Tomasz Janowski)

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