Welcome!

News Feed Item

Freddie Mac Prices Two New STACR Credit Risk Sharing Transactions, Including a New Higher LTV Series

MCLEAN, VA -- (Marketwired) -- 08/06/14 -- Freddie Mac (OTCQB: FMCC) priced two Structured Agency Credit Risk (STACR®) transactions today totaling $1.1 billion. The company priced a $672 million offering of STACR debt notes, Series 2014-DN3, and a $460 million offering of the new STACR-HQ1 series with a reference pool of loans with higher loan-to-value (LTV) ratios. These offerings represent the third and fourth STACR offerings this year where Freddie Mac transfers a portion of its credit risk on certain groups of loans to private investors.

When these transactions settle, the company will have issued $4.2 billion of STACR debt notes and obtained insurance coverage through ACIS (Agency Credit Insurance Structure) reinsurance transactions of $631 million since they were launched last year. Through these credit risk transfer transactions, the company will have laid off a substantial portion of the credit risk on $148 billion UPB in Single-Family mortgages.

Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac, said, "We are expanding our STACR product line with the HQ series of loans with LTVs of above 80% to 95%, and increasing the private market's participation in a segment of the housing market with lower down payment loans. The market is home purchase-oriented and the STACR HQ Series reflects this business volume which has higher LTV loans that adhere to our strong credit standards."

Palmer added, "We issued at a time of more market uncertainty than we've seen in recent months, and are now at overall levels closer to what we saw at the beginning of the year. We are working on expanding the investor base and are pleased to have over 80% of the bonds allocated to money managers, credit unions, insurance companies and pension funds."

STACR Debt Notes, Series 2014-DN3 and Series 2014-HQ1 were offered to the market by Barclays and RBS Securities as co-lead managers and joint bookrunners. Deutsche Bank Securities, J.P. Morgan and Wells Fargo Securities served as co-managers, and The Williams Capital Group, L.P. as a selling group member.

STACR 2014-DN3

Pricing for the STACR Series 2014-DN3, M-1 class was one-month LIBOR plus a spread of 135 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 240 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 400 basis points. The offering is scheduled to settle on or around August 11, 2014.

The Series 2014-DN3, M-1 class has 3.6% subordination and received an investment grade rating of A-(sf) from Fitch and A1(sf) from Moody's, subject to ongoing monitoring. The M-2 class has 2.4% subordination and received an investment grade rating of BBB-(sf) from Fitch and A3(sf) from Moody's, subject to ongoing monitoring. The M-3 class was not rated and has .40% subordination. The three classes have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1, M-2 and M-3 classes or strip off a portion of the interest from any class to create bonds with different margins.

For Series 2014-DN3, the amount of periodic principal and ultimate principal paid by Freddie Mac is determined by the performance of a very large and diversified reference pool of more than 87,000 residential loans, representing an unpaid principal balance of more than $19.7 billion. This pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the fourth quarter of 2013. Freddie Mac holds the senior risk and the first loss risk in the reference pool, and a portion of the risk in the M-1, M-2 and M-3 classes.

STACR, Series 2014-HQ1

Pricing for the STACR Series 2014-HQ1 M-1 class was one-month LIBOR plus a spread of 165 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 250 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 410 basis points. The offering is scheduled to settle on or around August 11, 2014.

The Series 2014-HQ1, M-1 class has 4.1% subordination and received investment grade ratings of and A-(sf) from Fitch and A2(sf) from Moody's, subject to ongoing monitoring. The M-2 class has 2.55% subordination and received investment grade ratings of BBB-(sf) from Fitch and Baa2(sf) from Moody's, subject to ongoing monitoring. The M-3 class was not rated and has .75% subordination. Similar to the Series 2014-DN3, the M-1, M-2 and M-3 Classes of the Series 2014-HQ1 have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1, M-2 and M-3 classes or strip off a portion of the interest from any class to create bonds with different margins.

For Series 2014-HQ1, the amount of periodic principal and ultimate principal paid by Freddie Mac is determined by the performance of a very large and diversified reference pool of more than 45,000 residential loans, representing an unpaid principal balance of approximately $10 billion. This pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the fourth quarter of 2013. Freddie Mac holds the senior risk and the first loss risk in the reference pool, and a portion of the risk in the M-1, M-2 and M-3 classes.

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (SEC) on February 27, 2014; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2013, excluding any information "furnished" to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information "furnished" to the SEC on Form 8-K.

Freddie Mac's press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Annual Report on Form 10-K for the year ended December 31, 2013, and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abilit...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
In IT, we sometimes coin terms for things before we know exactly what they are and how they’ll be used. The resulting terms may capture a common set of aspirations and goals – as “cloud” did broadly for on-demand, self-service, and flexible computing. But such a term can also lump together diverse and even competing practices, technologies, and priorities to the point where important distinctions are glossed over and lost.
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Detecting internal user threats in the Big Data eco-system is challenging and cumbersome. Many organizations monitor internal usage of the Big Data eco-system using a set of alerts. This is not a scalable process given the increase in the number of alerts with the accelerating growth in data volume and user base. Organizations are increasingly leveraging machine learning to monitor only those data elements that are sensitive and critical, autonomously establish monitoring policies, and to detect...
Two weeks ago (November 3-5), I attended the Cloud Expo Silicon Valley as a speaker, where I presented on the security and privacy due diligence requirements for cloud solutions. Cloud security is a topical issue for every CIO, CISO, and technology buyer. Decision-makers are always looking for insights on how to mitigate the security risks of implementing and using cloud solutions. Based on the presentation topics covered at the conference, as well as the general discussions heard between sessio...
In his session at 20th Cloud Expo, Scott Davis, CTO of Embotics, discussed how automation can provide the dynamic management required to cost-effectively deliver microservices and container solutions at scale. He also discussed how flexible automation is the key to effectively bridging and seamlessly coordinating both IT and developer needs for component orchestration across disparate clouds – an increasingly important requirement at today’s multi-cloud enterprise.
In his session at @DevOpsSummit at 20th Cloud Expo, Kelly Looney, director of DevOps consulting for Skytap, showed how an incremental approach to introducing containers into complex, distributed applications results in modernization with less risk and more reward. He also shared the story of how Skytap used Docker to get out of the business of managing infrastructure, and into the business of delivering innovation and business value. Attendees learned how up-front planning allows for a clean sep...
In his session at 20th Cloud Expo, Brad Winett, Senior Technologist for DDN Storage, will present several current, end-user environments that are using object storage at scale for cloud deployments including private cloud and cloud providers. Details on the top considerations of features and functions for selecting object storage will be included. Brad will also touch on recent developments in tiering technologies that deliver single solution and an end-user view of data across files and objects...
In his session at @ThingsExpo, Arvind Radhakrishnen discussed how IoT offers new business models in banking and financial services organizations with the capability to revolutionize products, payments, channels, business processes and asset management built on strong architectural foundation. The following topics were covered: How IoT stands to impact various business parameters including customer experience, cost and risk management within BFS organizations.
Given the popularity of the containers, further investment in the telco/cable industry is needed to transition existing VM-based solutions to containerized cloud native deployments. The networking architecture of the solution isolates the network traffic into different network planes (e.g., management, control, and media). This naturally makes support for multiple interfaces in container orchestration engines an indispensable requirement.
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, discussed how AI can simplify cloud operations. He covered the following topics: why cloud mana...