Bank of China Ltd may own about $20 billion of debt issued by Fannie
Mae and Freddie Mac, representing two-thirds of total holdings among
the six largest Chinese banks, according to CLSA Ltd.

The Freddie Mac and Fannie Mae investments would amount to about 2.6
percent of total assets at Bank of China, the nations third-biggest,
CLSA analysts said yesterday in a note to clients. That compares with
0.09 percent at larger Industrial and Commercial Bank of China Ltd
(ICBC), they said.

ICBC may have $1 billion of securities linked to the two beleaguered
US home loan companies, while China Construction Bank Corp, the second
largest, may have $7 billion of such holdings, according to the report.
China CITIC Bank Co may own $1.4 billion of agency debt, CLSA said.

The government-sponsored companies tumbled on Tuesday in New York
Stock Exchange composite trading as investors lost confidence in
Treasury Secretary Henry Paulsons plan to shore up their finances.
Moodys Investors Service reduced the lendersfinancial strength
ratings, saying credit losses may jeopardize dividend payments on
preferred shares.

As most Chinese banks classify the holdings as available-for-sale or
held-to-maturity, they are unlikely to book a loss on their income
statements, and declines in bond prices in July won’t affect first-half
earnings, CLSA said.