Freddie Mac announces pricing for first credit risk-sharing deal of 2016

Next offering coming in February?

Freddie Mac announced Wednesday that it priced its first Structured Agency Credit Risk Series credit risk-sharing deal of 2016.

The deal, STACR Series 2016-DNA1, was announced in early January.

STACR Series 2016-DNA1 has a reference pool of recently acquired single-family mortgages with an unpaid principal balance of more than $35.7 billion.

As part of the deal, Freddie Mac holds the senior loss risk in the capital structure, and a portion of the risk in the Class M-1, M-2, M-3, and B Bonds.

According to Freddie Mac, STACR Series 2016-DNA1 priced as follows:

  • M-1 class was one-month LIBOR plus a spread of 145 basis points
  • M-2 class was one month LIBOR plus a spread of 290 basis points
  • M-3 class was one month LIBOR plus a spread of 555 basis points
  • B class was one month LIBOR plus a spread of 1,000 basis points

"We are quickly starting off the year with an issuance and expect to have eight STACR offerings through October as reflected in our published deal calendar," said Mike Reynolds, vice president of Freddie Mac credit risk transfer. "With current market conditions we are pleased to sell a billion dollars of credit bonds and believe it reflects investors' positive view of the company's credit fundamentals."

Bank of America Merrill Lynch and J.P. Morgan are co-lead managers and joint bookrunners. BarclaysCitigroupCredit Suisse and Wells Fargo are co-managers, and Williams Capital is a selling group member.

The offering is scheduled to settle on or around Jan. 21, 2016.

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