InvestmentsMortgage

Fannie Mae to list risk-sharing bonds on Irish Stock Exchange

Will hold “sufficient” credit risk to ensure compliance with European Union rules

European investors seeking to buy into the U.S. mortgage market will now have that opportunity, after Fannie Mae announced that it plans to list all of its outstanding risk-sharing mortgage bonds on the Irish Stock Exchange.

According to Fannie Mae, it previously listed its Connecticut Avenue Securities Series 2014-C04 notes on the Irish Stock Exchange in 2014, and also now lists its Series 2013-C01, 2014-C01, 2014-C02, 2014-C03 and 2015-C01 notes on the ISE.

Additionally, Fannie Mae said that it will list each new Connecticut Avenue Securities offering on the ISE as well.

Fannie also stated that it will retain “sufficient credit risk” in each CAS offering to ensure compliance with the European Union’s risk retention requirements.

“We are pleased to be able to help facilitate greater participation by European investors in our CAS offerings,” said Laurel Davis, Vice President for credit risk transfer at Fannie Mae. “Listing CAS deals on the ISE and complying with EU risk retention rules are part of our continuing effort to expand the investor base in the program.”

Reducing taxpayer risk is one of the main goals that the Federal Housing Finance Agency laid out for Fannie Mae and Freddie Mac. In fact, reducing taxpayer risk makes up 30% of the FHFA’s scorecard for the GSEs.

Fannie and Freddie more than quadrupled their issuance of risk-sharing deals in 2014, as the government-sponsored enterprises continue their efforts to limit the American taxpayer’s liability.

According to a recent report from Fitch Ratings, the GSEs issued their first three risk-sharing deals in 2013 with a total reference pool of $84.7 billion. But in 2014, the GSEs upped the risk-sharing ante significantly, issuing 11 total deals with a total reference pool of $369.7 billion.

The GSEs first began offering the credit risk-sharing deals in 2013, as a means to attract private capital back to the mortgage market, and according to Fitch’s data, that’s just what the GSEs have done, to the tune of $454.4 billion.

Earlier this week, Freddie 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.

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