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
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
Struggling to keep up with increasing application demand? Learn how Platform as a Service (PaaS) can streamline application development processes and make resource management easy.
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, will show how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningfu...
If there is anything we have learned by now, is that every business paves their own unique path for releasing software- every pipeline, implementation and practices are a bit different, and DevOps comes in all shapes and sizes. Software delivery practices are often comprised of set of several complementing (or even competing) methodologies – such as leveraging Agile, DevOps and even a mix of ITIL, to create the combination that’s most suitable for your organization and that maximize your busines...
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists will dis...
Up until last year, enterprises that were looking into cloud services usually undertook a long-term pilot with one of the large cloud providers, running test and dev workloads in the cloud. With cloud’s transition to mainstream adoption in 2015, and with enterprises migrating more and more workloads into the cloud and in between public and private environments, the single-provider approach must be revisited. In his session at 18th Cloud Expo, Yoav Mor, multi-cloud solution evangelist at Cloudy...
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
See storage differently! Storage performance problems have only gotten worse and harder to solve as applications have become largely virtualized and moved to a cloud-based infrastructure. Storage performance in a virtualized environment is not just about IOPS, it is about how well that potential performance is guaranteed to individual VMs for these apps as the number of VMs keep going up real time. In his session at 18th Cloud Expo, Dhiraj Sehgal, in product and marketing at Tintri, will discu...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...