US Treasury Department to sell off $142bn in securities holdings

THE US Treasury Department said it will begin later this month to sell off $142bn (£87bn) in mortgage-backed securities it acquired to combat the 2007-2009 financial crisis.

The move to dispose of its portfolio of agency-backed MBS by selling $10bn worth each month was seen as a signal of the government’s confidence in the recovery, and is expected to reap $15bn to $20bn profit.

Markets were caught by surprise at the announcement of a fresh supply of high-quality debt coming to market, and prices for competing US government debt fell while agency MBS spreads versus Treasuries widened.

The Treasury holdings are primarily 30-year fixed-rate MBS guaranteed by either Fannie Mae or Freddie Mac, the mortgage giants that were taken into public ownership in the crisis.