Freddie Mac Prices $1.4 Billion Multifamily K-Deal, K-127

Rhea-AI Summary

On March 17, 2021, Freddie Mac (FMCC) announced the pricing of approximately $1.4 billion in Structured Pass-Through Certificates (K-127 Certificates), backed by fixed-rate multifamily mortgages primarily with 10-year terms. The issuance is expected to settle on or around March 25, 2021. Key details include various classes of K Certificates, led by co-managers Wells Fargo Securities and Deutsche Bank Securities. Freddie Mac aims to transfer risk from taxpayers to private investors through K-Deals, which offer stable cash flows and structured credit enhancements.

Positive

• Issuing $1.4 billion in K-127 Certificates, expected to enhance liquidity.
• Structured Pass-Through Certificates back multifamily mortgages, promoting housing stability.

Negative

• None.

MCLEAN, Va., March 17, 2021 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. The company expects to issue approximately $1.4 billion in K Certificates (K-127 Certificates), which are expected to settle on or about March 25, 2021.

K-127 Pricing

Class	Principal/Notional Amount (mm)		Weighted Average Life (Years)	Spread (bps)	Coupon		Yield		Dollar Price
A-1	$141.149		6.94	S+9	1.35300%		1.34334%		$99.9983
A-2	$1,108.822		9.80	S+18	2.10800%		1.76575%		$102.9950
A-M	$186.332		9.90	S+25	1.85100%		1.84533%		$99.9917
X1	$1,249.971		9.23	T+95	0.42302%		2.53202%		$2.7702
XAM	$186.332		9.63	Non-Offered
X3	$116.457		9.67	T+275	2.74576%		4.38299%		$21.0203

Details

• Co-Lead Managers and Joint Bookrunners: Wells Fargo Securities, LLC and Deutsche Bank Securities Inc.
• Co-Managers: J.P. Morgan Securities LLC, Loop Capital Markets LLC, Morgan Stanley & Co. LLC and Piper Sandler & Co.
• Rating Agencies: Fitch Ratings, Inc. and DBRS, Inc.
  

Related Links

• The K-127 Preliminary Offering Circular Supplement: http://www.freddiemac.com/mbs/data/k127oc.pdf   
• Freddie Mac Multifamily Securitization Overview
• Multifamily Securities Investor Access database of post-securitization data from Investor Reporting Packages
• More information about Class A-M and Class XAM

The K-127 Certificates are backed by corresponding classes issued by the FREMF 2021-K127 Mortgage Trust (K127 Trust) and guaranteed by Freddie Mac. The K127 Trust will also issue certificates consisting of Class X2-A, Class X2-B, Class D and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-127 Certificates.

Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (SEC) on February 11, 2021; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2020, excluding any information "furnished" to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information “furnished” to the SEC on Form 8-K.

Freddie Mac’s press releases sometimes contain forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments and estimates, and various factors could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements. These assumptions, judgments, estimates and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2020, and its reports on Form 10-Q and Form 8-K, which are available on the Investor Relations page of the company’s Web site at www.FreddieMac.com/investors and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this press release. The multifamily investors section of the company’s Web site at https://mf.freddiemac.com/investors/ will also be updated, from time to time, with any information on material developments or other events that may be important to investors, and we encourage investors to access this website on a regular basis for such updated information.

The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this press release. The multifamily investors section of the company’s Web site at https://mf.freddiemac.com/investors/ will also be updated, from time to time, with any information on material developments or other events that may be important to investors, and we encourage investors to access this website on a regular basis for such updated information.

The financial and other information contained in the documents that may be accessed on this page speaks only as of the date of those documents. The information could be out of date and no longer accurate. Freddie Mac undertakes no obligation, and disclaims any duty, to update any of the information in those documents.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.

MEDIA CONTACT: Erin Mancini
703-903-1530
Erin_Mancini@FreddieMac.com
INVESTOR CONTACTS: Robert Koontz
571-382-4082
Amanda Nunnink
312-407-7510

FAQ

What is the significance of Freddie Mac's K-127 Certificates offering on March 17, 2021?

The offering of K-127 Certificates, worth approximately $1.4 billion, enhances Freddie Mac's liquidity and supports the multifamily mortgage market.

When is the Freddie Mac K-127 Certificates expected to settle?

The K-127 Certificates are expected to settle on or about March 25, 2021.

Who are the co-lead managers for the K-127 Certificates?

Wells Fargo Securities, LLC and Deutsche Bank Securities Inc. are the co-lead managers for the K-127 Certificates.

What types of mortgages back the K-127 Certificates?

The K-127 Certificates are backed by fixed-rate multifamily mortgages, predominantly with 10-year terms.

How does Freddie Mac's K-Deals strategy impact taxpayers?

Freddie Mac's K-Deals strategy transfers a portion of the risk of losses from taxpayers to private investors, improving the housing finance system.