SYS-CON MEDIA Authors: ITinvolve Blog, Vormetric Blog, Jason Bloomberg, Liz McMillan, Pat Romanski

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
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
Code Halos - aka "digital fingerprints" - are the key organizing principle to understand a) how dumb things become smart and b) how to monetize this dynamic. In his session at @ThingsExpo, Robert Brown, AVP, Center for the Future of Work at Cognizant Technology Solutions, outlined research, analysis and recommendations from his recently published book on this phenomena on the way leading edge organizations like GE and Disney are unlocking the Internet of Things opportunity and what steps your o...
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial C...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
Log data provides the most granular view into what is happening across your systems, applications, and end users. Logs can show you where the issues are in real-time, and provide a historical trending view over time. Logs give you the whole picture. Logentries, a log management and analytics service built for the cloud, has announced a new integration with Slack, the team communication platform, to enable real-time system and application monitoring. Users of both services can now receive real-...
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
At 15th Cloud Expo, Shrikant Pattathil, Executive Vice President at Harbinger Systems, demos a video delivery platform that helps you do interactive videos. He discusses how Harbinger is accomplishing it in the cloud world, the problems they faced and the choices they made to get around these problems.
“Will Jaya is a direct source for server integration and storage solutions. If you are looking for any specific configurations for a project we can help you configure based on your needs and requirements," explained Netty Goya, CEO of Will Jaya, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
“The year of the cloud – we have no idea when it's really happening but we think it's happening now. For those technology providers like Zentera that are helping enterprises move to the cloud - it's been fun to watch," noted Mike Loftus, VP Product Management and Marketing at Zentera Systems, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what th...
Dale Kim is the Director of Industry Solutions at MapR. His background includes a variety of technical and management roles at information technology companies. While his experience includes work with relational databases, much of his career pertains to non-relational data in the areas of search, content management, and NoSQL, and includes senior roles in technical marketing, sales engineering, and support engineering. Dale holds an MBA from Santa Clara University, and a BA in Computer Science f...
The Internet of Things (IoT) is rapidly in the process of breaking from its heretofore relatively obscure enterprise applications (such as plant floor control and supply chain management) and going mainstream into the consumer space. More and more creative folks are interconnecting everyday products such as household items, mobile devices, appliances and cars, and unleashing new and imaginative scenarios. We are seeing a lot of excitement around applications in home automation, personal fitness,...
Entuity®, a provider of enterprise-class network management solutions, today announced that it solidifies its position as a market leader through global enterprise customer acquisitions and a refined channel strategy. In 2014, Entuity increased new license revenues in EMEA by over 75 percent, and LATAM by over 125 percent as customers embraced Entuity for its highly automated solution and unified architecture. Entuity’s refined channel strategy focuses on even deeper strategic alignment with ke...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.