Raines said that Fannie Mae would issue the notes as frequentlyas every quarter during the course of 2001, and on at least asemi-annual basis thereafter. The company expects to issue as muchas $15 billion worth of the notes over the three-year phase-inperiod that ends at the close of 2003.

Fannie Mae appointed Morgan Stanley Dean Witter as advisor andarranger, and chose Goldman, Sachs & Co., Morgan Stanley DeanWitter and Salomon Smith Barney as joint-lead managers for theinaugural transaction expected in early 2001. Fannie Mae'sSubordinated Benchmark Notes have received a prospective rating ofAa2 from Moody's Investor Services and an expected rating ofAA-from Standard & Poor's.

Timothy Howard, Fannie Mae's CFO, said that the new notes wouldbe in addition to, and not a substitute for, core capital. He notedthat the they would provide an additional loss absorbing capitallayer, and that their trading level would be an early warningsignal of the market's perception of the company's financialstrength.