FDIC Sells $233m of Commercial Mortgage-Backed Notes
The Federal Deposit Insurance Corp. (FDIC) sold $233m in notes backed by performing and non-performing commercial real estate loans from 22 financial institutions under receivership. The underlying mortgages bear an aggregate unpaid principal balance of $1bn. The FDIC was appointed receiver during the period from August 2008 to March 2009. The notes were originally issued in January 2010 to the FDIC as receiver, in connection with the creation of a limited liability company (LLC) to hold the assets. The $222m in proceeds generated from the sale of the notes will go to the respective failed bank receiverships. That way, the sale of the notes will increase recoveries for the receiverships and recover funds for the FDIC's Deposit Insurance Fund. The timely payment on the notes is guaranteed by the FDIC, which still retains its 60% equity interest in the LLC. ColFin DB Funding, formed by entities affiliated with Colony Capital, still owns the 40% equity interest sold to it by the FDIC in January 2010. Barclays Capital served as the sole bookrunner, restructuring agent, and financial advisor to the FDIC on the sale of Structured Sale Guaranteed Notes (SSGN 2010-L3): The sale features three classes of notes with maturities of approximately 1.6 years, 2.6 years, and 3.6 years from the closing date, according to a statement on the transaction's structure. The Class A1 worth $58.1m priced at 98.19% to yield approximately 1.12% per annum with maturity of Jan. 7, 2012. The Class A2 notes worth $117m priced at 95.73% to yield approximately 1.66% per annum with maturity of Jan. 7, 2013. The Class A3 notes worth $58m priced at 92.32% to yield approximately 2.21% per annum with maturity of Jan. 7, 2014. The notes do not accrue interest or make payments prior to maturity. Instead, they are sold at a discount to their principal balance, allowing investors to earn the difference between the sale price and the principal balance paid at maturity. The latest sale marks the fourth sale of structured notes by the FDIC since the early 1990s, and the fourth sale of FDIC-guaranteed debt backed by the full faith and credit of the US government. Write to Diana Golobay.