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Freddie Mac offloading $916 million in latest credit risk-sharing deal

3rd STACR deal of 2016

As part of its continuing mission to shift some of the credit risk it faces from the taxpayers and onto the private market, Freddie Mac announced Friday that it plans to sell its third credit risk-sharing deal of 2016.

The latest deal in Freddie Mac’s Structured Agency Credit Risk series is its 20th STACR deal since the program’s inception in 2013.

STACR Series 2016-DNA2 is a debt note offering of $916 million, which could be adjusted based on market conditions, Freddie Mac said.

According to Freddie Mac, STACR Series 2016-DNA2 has a reference pool of recently acquired single-family mortgages with an unpaid principal balance of more than $30 billion.

Under the terms 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.

Nomura Securities and Bank of America Merrill Lynch will serve as co-lead managers and joint bookrunners.

Through its 19 previous STACR offerings, as well as its other credit risk-sharing vehicles, Freddie Mac has transferred a “substantial portion” of credit risk on more than $440 billion of unpaid principal balance on single-family mortgages to an investor base that includes approximately 200 unique investors, including reinsurers.

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