Freddie Mac prices first high-LTV risk-sharing bond of 2015

STACR 2015-HQ1 features loans with 80-95% loan-to-value ratio

Freddie Mac priced its first high loan-to-value risk-sharing bond of 2015, which is supported by loans with LTV ratios of 80-95%.

According to Freddie, STACR Series 2015-HQ1 features a reference pool of 75,508 recently originated single-family mortgages with an unpaid principal balance of more than $16.5 billion.

The underlying loans of STACR Series 2015-HQ1 carry an average balance of $219,203 and a weighted average original LTV of 92%.

According to Freddie Mac, the response to the deal was positive.

"Investor demand for the HQ deal was high, and we were able to make a modest upsize of the transaction,” said Mike Reynolds, Freddie Mac vice president of credit risk transfer. “This is a part of Freddie Mac's strategy to be responsive to the market.”

According to Freddie, STACR Series 2015-HQ1 priced at one-month LIBOR plus a spread of 105 basis points for the M-1 class. Pricing for the M-2 class was one month LIBOR plus a spread of 220 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 380 basis points. Pricing for the B class was one month LIBOR plus a spread of 1075 basis points.

With STACR Series 2015-HQ1, Freddie Mac is also issuing 150 basis points of first loss and rating the M-3 bond. Freddie Mac will hold the senior loss risk in the reference pool and a portion of the risk in the Class M-1, M-2 and M-3, and the first loss Class B tranche.

"We expect routine sales of the higher LTV benchmark HQ series to facilitate more transparency and liquidity in the credit risk transfer market," Reynolds said last week.

Earlier this year, Freddie said that it plans to increase its issuance of risk-sharing deals this year. The GSE said that it is planning to offer up six to eight STACR deals in 2015, based on market conditions. 

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