Chinese To Buy 2 Billion in Mortgage Backed Securities
In another sign that the world markets are not completely spooked by the real estate market in the United States, the China Investment Corp. is planning on buying 2 billion dollars worth of mortgage backed securities. This indicates to me that US real estate even in a weak place is still one of the better investments internationally.
Very few expect the downturn in the United States to be a permanent fixture, but the confidence in other economies is severely lacking. So as we watch our real estate markets with fearful eyes locally, on an international scale US real estate is still considered a worthy investment.
China Investment Corp. (CIC) plans to invest soon in U.S. taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF).
Under the Public-Private Investment Plan (PPIP) launched earlier this year, the U.S. government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as $40 billion in toxic securities from banks.
Compared with TALF, the new and smaller PPIP program focuses on safer toxic securities, which must have triple-A ratings from at least two agencies, and are debts guaranteed by the Federal Deposit Insurance Corporation (FDIC), sources explained. via CNN.
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Comment by Brandon Green on 24 August 2009:
Smart move on their part.
Comment by paruweb on 25 August 2009:
I hope US real estate market will soon get better position in the market.
Comment by Gainesville Realtor on 28 August 2009:
At least they finally learned to buy low. I wonder if they’ll sell high.