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Fannie Mae Announces New Issue Callable Benchmark Notes 5 Noncall 2-Year due July 18, 2006 and 10 Noncall 3-Year due July 19, 2011.

Business Editors

WASHINGTON--(BUSINESS WIRE)--July 10, 2001

----------------------------------------------------------------------
 5-Year 10-Year
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Pricing Date July 12, 2001 July 12, 2001
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Settlement Date July 18, 2001 July 18, 2001
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Structure 5 noncall 2 years 10 noncall 3 years
 with one-time with one-time
 (European) call (European) call
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One-time Call Date July 18, 2003 July 19, 2004
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Maturity Date July 18, 2006 July 19, 2011
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Payment Dates Each July 18th Each July 18th and
 and January 18th, January 18th,
 beginning beginning
 January 18, 2002 January 18, 2002
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CUSIP 31359MKE2 31359MKF9
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Listing (expected) Luxembourg Stock Luxembourg Stock
 Exchange Exchange
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Merrill Lynch & Co. Inc. and Salomon Smith Barney Inc. are the joint lead managers. The co-managers include Credit Suisse First Boston; Goldman, Sachs & Co.; Lehman Brothers Inc.; J.P. Morgan Securities Inc.; and Morgan Stanley & Co.

Concurrent with the resumption of Callable Benchmark Notes(R) issuance, Fannie Mae and the Callable Benchmark Notes dealer group are introducing a new and comprehensive framework to be used in pricing Callable Benchmark Notes.

In conjunction with Bloomberg L.P. and TradeWeb, Fannie Mae has created an option-adjusted spread valuation methodology that analyzes Fannie Mae Callable Benchmark Notes relative to an up-to-the-minute Fannie Mae noncallable Benchmark Securities SM curve, while simultaneously incorporating the appropriate up-to-date mid-market European swaption volatility. Fannie Mae and the dealers will use this framework for pricing new issues and reopenings, and the framework will also be available to market participants for use in valuation analysis and secondary market trading.

This model can be accessed in Bloomberg via a new "OASF" screen for specific securities and is available only for Fannie Mae callable debt issues. The OASF screen on the two announced securities can be accessed in Bloomberg by typing in the CUSIP <CORP> OASF <GO>.

Yields for the Fannie Mae noncallable Benchmark Securities with maturities from 2 years to 30 years that are used to define the curve will be fed directly from TradeWeb into OASF on a live basis throughout the New York fixed-income trading day.

The real-time mid-market European swaption volatility levels appropriate for each structure will come from the Tullett and Tokyo (TTKL) interest rate swaption volatility series found on Bloomberg.

Fannie Mae's Universal Debt Facility Offering Circular is used for all of our debt securities settling upon original issuance on or after January 23, 2001. This offering document may be accessed via Fannie Mae's Web site at http:/www.fanniemae.com/markets/debt/offering_circulars.html.

This announcement is neither an offer to sell nor a solicitation of offers to buy any of these securities. Any such offering will be made only by an offering circular and supplement thereto.

Fannie Mae is a New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages.

Fannie Mae is working to shrink the nation's "homeownership gaps" through a $2 trillion "American Dream Commitment" to increase homeownership rates and serve 18 million targeted American families by the end of the decade. Since 1968, Fannie Mae has provided more than $3.0 trillion of mortgage financing for 38 million families.

More information about Fannie Mae can be found on the Internet at http://www.fanniemae.com.

Benchmark Notes is a registered mark and Benchmark Securities is a service mark of Fannie Mae. Unauthorized use of these marks is prohibited.

Style Usage: Fannie Mae's Board of Directors has authorized the company to operate as "Fannie Mae," and the company's stock is now listed on the NYSE as "Fannie Mae." In order to facilitate clarity and avoid confusion, news organizations are asked to refer to the company exclusively as "Fannie Mae."
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:Jul 10, 2001
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