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  • Freddie Mac reports $354M net loss in first quarter

    Freddie Mac reported a $354 million net loss in the first quarter, significantly down from its $2.2 billion net income recorded in the fourth quarter of 2015. The news is a reminder of the GSE's net loss in the third quarter of 2015, which marked the first loss in four years. But despite the news, Freddie CEO Donald Layton remains positive on the results. Click the headline to find out why.


More investors buy into Freddie Mac risk-sharing deal

Placing credit risk in the private market is officially a good idea

Freddie Mac

Freddie Mac released the pricing of its third risk-sharing mortgage credit securitization platform. Based on the growing investor base, the government-sponsored enterprise couldn't be happier with the result and is already planning more.

"We are pleased with the investor interest and demand for this product as more investors are buying the bonds," said Donna Corley, senior vice president of single family pricing and costing for Freddie Mac. "We plan regular and consistent issuances this year so that the amount of risk transferred to private investors will increase over time."

More than 65 investors participated in the oversubscribed offering.

Pricing for the single-A rated class was one-month LIBOR plus 100 basis points.

Pricing for the triple-B rated class was one month LIBOR plus 220 basis points.

Pricing for the unrated class was one month LIBOR plus 450 basis points.

"We've introduced three bonds for the STACR 2014 series, compared to the two we offered in 2013, which provides more credit protection to Freddie Mac and enhances the product mix for investors," said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac. "We believe these enhancements attracted even more investors, as we saw over 20 new investors in the book."

Indeed, this STACR offers more flexibility to investors. The three classes are exchangeable, meaning investors can either combine pro-rata portions of the cash flows from each class or strip off a portion of the interest from any class to create bonds with different margins.

"We anticipate that more investors will continue to be attracted to the risk-sharing program," Palmer added.

The deal is backed by 140,000 residential loans, representing an unpaid principal balance of approximately $32.4 billion. This STACR pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac in the second quarter of 2013.

Credit Suisse and Bank of America Merrill Lynch worked as co-lead managers and joint bookrunners.

BNP Paribas, JP Morgan and Nomura served as co-managers.

Mischler Financial worked as a selling group member.


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