Media and politicians are hyping Freddie’s $2 billion of debt offerings as a big win. They even go so far as to say this means that there is less likelihood that Fannie and Freddie will be nationalized. Click here for the hype.

I don’t see it the way they do. If you believe the government is going to take over, there is minimal risk to buying the debt at higher yields. I might be impressed if the Treasury came out a few minutes before the offering and said “We will not nationalize Freddie Mac” and then debt investors bought the debt anyway at market interest rates for 3-month and 6-month paper. But that is not what happened.  I might be impressed if they sold equity without a discount even though a bailout would wipe out that new equity. But that is not what happened. They offered new debt at high yields. That is not impressive to me. I don’t see this offering as any evidence that a government takeover is less likely.