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Freddie Buys Back $18bn in Short-term Debt

Freddie Mac (FRE) on Friday ended its largest ever cash tender offer, reporting it bought back $18.04bn of its securities. The tender was announced June 1 in attempt to reduce the GSE’s effective short-term debt and move toward larger, longer-term deals with lower rates. The offered debt contained issues totaling nearly $70bn. Those securities accepted held maturities between September 2009 and August 2010. Mohit Sudhakar, senior director of debt portfolio management at Freddie Mac, told Reuters the size of the buyback was within the company’s expectations and in line with prior tender offers. “All tender offers or any repurchase activities that we do are designed also for supporting not only the liquidity but also the price performance of our securities, which over the long run helps us achieve better funding,” Sudhakar said. Freddie Mac’s short-term funding fell in first-quarter 2009 by $35bn, while its long-term funding increased by $64bn, according to RBS Securities data — signaling the strategic shift toward long-term funding. All purchases have been offered through lead dealer manager, Barclays Capital, Inc. (BCS), and managers Morgan Stanley (MS) and Deutsche Bank (DB). The tender offer expired at 5pm EST Friday. The company says the settlement date for all securities tendered and accepted is June 9, 2009. All accepted securities must be delivered to one of the dealer managers no later than 1:30 pm EST, on the settlement date. Write to Kelly Curran.

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