Norway May Shift Portfolio Toward U.S. Mortgage-Backed Securities, Impacting FNMA Stock
Norges Bank Investment Management has proposed a significant shift in its fixed-income portfolio by reducing the weighting of government bonds from 70% to 50%, potentially selling $75–80 billion worth of U.S. Treasuries and reallocating toward non-government debt, including agency mortgage-backed securities (MBS). This move comes amid high Treasury yields and comments from Treasury Secretary Scott Bessent suggesting Norway might trade Treasuries for assets like Fannie Mae's MBS. Fannie Mae has seen a sharp decline in its stock price this year but reported strong second-quarter earnings, with $4 billion net income driven by guaranty-fee revenue. The company remains under federal conservatorship and trades at significant discounts to sector averages on valuation metrics like P/E and P/S ratios. Bessent's remarks are viewed as a potential signal of increased institutional interest in Fannie Mae-linked assets, which could support the stock if Norway proceeds with its portfolio shift.
Tickers: $FNMA
Topics: Fannie Mae FNMA stock mortgage-backed securities Norges Bank U.S. Treasuries