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Freddie Mac Prices Transaction to Share Residential Mortgage Credit Risk With Private Investors

MCLEAN, VA--(Marketwired - Nov 5, 2013) - Freddie Mac (OTCQB: FMCC) today priced a $630 million offering of the Freddie Mac Structured Agency Credit Risk (STACR®) debt notes. This offering represents the company's second STACR offering in which private sources, and not taxpayers, predominately take the credit risk.

"STACR is part of Freddie Mac's strategy to share credit risk with private investors while also fostering an agency credit market," said David Lowman, executive vice president of single-family business for Freddie Mac. "With two successful STACR offerings under our belt, we are well on our way to having a scalable offering with regular issuances. We are pleased with the markets' acceptance of these bonds."

About 50 broadly-diversified investors participated in the offering. Pricing for the STACR debt notes, Series 2013 DN2 M-1 class was one-month LIBOR plus a spread of 145 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 425 basis points. The offering was oversubscribed and is scheduled to settle on Nov. 12, 2013.

The STACR DN2, M-1 class received investment grade ratings of Baa1 by Moody's and BBB-(sf) by Fitch, subject to ongoing monitoring. The M-2 class is not rated. Both classes have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1 and M-2 classes or to strip off a portion of the interest from either class to create bonds with different margins. 

For STACR DN2, 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 145,500 residential loans, representing an unpaid principal balance of approximately $35.3 billion unpaid principal balance. This pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the first quarter of 2013. Freddie Mac holds the senior risk and the first loss risk in reference pool, and a portion of the risk in the M-1 and M-2 classes.

STACR Debt Notes, Series 2013-DN2 were offered to the market by Barclays Capital as co-lead manager and sole bookrunner. Morgan Stanley also served as co-lead manager. Nomura, RBS and Wells Fargo served as co-managers.

The first STACR offering, Series 2013 DN1, settled in July and was well-received by the market.

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, 2012, filed with the Securities and Exchange Commission ("SEC") on February 28, 2013; 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, 2012, 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, 2012, 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 homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com. Twitter: @FreddieMac








 

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac does not undertake an obligation, and disclaims any duty, to update any of the information in those documents. Freddie Mac's future performance, including financial performance, is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the company's future results are discussed more fully in our reports filed with the SEC.


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