dwb

Fannie and Freddie Can't Sell Their Debt

"switches" or swaps are pretty common - an investor who already owns the debt picks up a little yield for the new issue over the old. Same credit and interest rate risk, more yield. The old debt that they swapped out of still has to be sold by the bank anyway - not like it just vanishes. So who's the bank selling the old issue to? Fannie and Freddie are not redeeming and the bank is likely not taking the risk on its balance sheet so stands to reason someone is buying the old debt as well.