Fannie Mae and Freddie Mac's delisting from the New York Stock Exchange could result in huge losses for Chinese bondholders, the National Business Daily reported Friday.

Fannie Mae and Freddie Mac, the two largest mortgage lenders in the U.S., announced Wednesday plans to delist their shares from the NYSE.

Delisting could mean huge losses to the companies' bond holders both in the U.S. and around the world.

According to the biography of former US Treasury Secretary Henry Paulson, investors outside the U.S. – mostly in Japan, China and Russia – hold more than US$1 trillion in Fannie Mae and Freddie Mac bonds.

Market rumor puts Chinese government's bond holdings at US$376 billion and Chinese commercial banks' holdings at more than US$25 billion. But the National Business Daily cited an unnamed insider who said that the real number is even higher.

After the breakout of the global financial crisis, Chinese banks have reduced its bond holdings of Fannie Mae and Freddie Mac. The Beijing News reported that by the end of June 2009 the bond holdings of Bank of China, China Construction Bank, Industrial and Commercial Bank of China totaled US$6.59 billion, down from US$23.25 billion of holdings in the middle of 2008.

China's business press carried the story above on Friday. China.org.cn has not checked the stories and does not vouch for their accuracy.

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