China bought $US9.6 billion in Fannie Mae and Freddie Mac debt, down from $US14.9 billion in May. Short selling Standard & Poor's cut Fannie and Freddie's preferred stock and subordinated debt ratings by three levels last week to A- from AA-. S&P affirmed the companies' AAA senior debt rating, reflecting perceived government support. A rule that made it harder for investors to bet against Fannie and Freddie's shares also expired last week. The Securities and Exchange Commission on July 21 imposed a temporary order that tightened rules for 19 stocks, including Fannie and Freddie, prohibiting firms from so-called naked short selling, where they sell shares without actually borrowing them. The cost to protect the subordinated debt of Fannie Mae and Freddie Mac from default climbed to a record.