WASHINGTON (AP) _ Freddie Mac said Tuesday it would sell $4 billion in two-year and five-year debt this week in auctions that should give an indication of investors' confidence in the mortgage finance company.

By ALAN ZIBEL

WASHINGTON (AP) _ Freddie Mac said Tuesday it would sell $4 billion in two-year and five-year debt this week in auctions that should give an indication of investors' confidence in the mortgage finance company.

Investors are watching the debt sales of Freddie Mac and its sibling company, Fannie Mae, to gauge whether the companies are having problems continuing their operations without government support. The companies' ability to sell debt last week diminished the sense of urgency about the two-companies' future that seized Wall Street for much of last month.

Debt issued by Fannie and Freddie "continues to attract investors, although the cost of funding is continuing to nudge higher," Barclays Capital analysts Rajiv Setia and Philip Ling wrote in a research note last week.

Freddie Mac sold $2 billion in three-month and six month debt on Tuesday morning and was due to sell an additional $1 billion in five year-debt by early afternoon. The McLean, Va.-based company also said it would sell a new $3 billion two-year debt security on Wednesday.

When companies issue debt, prices are often compared with those of similar-length Treasury bonds. Treasury yields are often a benchmark because they are considered the safest investments since they are backed by the government. The wider the gap, or spread, between corporate debt and treasury yields, the riskier investors deem the corporate debt.

With this week's auctions, Freddie Mac will have sold $43 billion in long-term debt this year in monthly auctions. The debt can be issued as two-, three-, five- and 10-year notes.

Shares of Freddie Mac rose 35 cents, or 7.8 percent, in morning trading to $4.86, while shares of Fannie Mae rose 30 cents, or 4.4 percent to $7.14.

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