Freddie Mac Prices $1 Billion Multifamily K-Deal, K-F98

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) has announced the pricing of its new offering of approximately $1 billion in Structured Pass-Through Certificates (K-F98 Certificates). Set to settle on February 11, 2021, these certificates back floating-rate multifamily mortgages with 10-year terms. The offering includes classes of senior bonds indexed to both SOFR and LIBOR. Co-lead managers include Goldman Sachs and J.P. Morgan, with the K-F98 Certificates not rated but guaranteed by Freddie Mac, aimed at transferring risk away from taxpayers.

Positive

• Freddie Mac priced approximately $1 billion in new K-F98 Certificates, indicating strong investor interest.
• The K-F98 Certificates are backed by floating-rate multifamily mortgages, which can provide stable cash flows.
• The offering allows Freddie Mac to transfer risk away from taxpayers to private investors.

Negative

• None.

MCLEAN, Va., Feb. 04, 2021 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) has priced a new offering of Structured Pass-Through Certificates (K Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The approximately $1 billion in K Certificates (K-F98 Certificates) are expected to settle on or about February 11, 2021. The K-F98 Certificates are backed by floating-rate multifamily mortgages with 10-year terms.

K-F98 includes one class (Class AS) of senior bonds indexed to SOFR and backed only by SOFR-based mortgages, and another class (Class AL) of senior bonds indexed to LIBOR and backed only by mortgages which are currently LIBOR-based.

K-F98 Pricing

Class	Principal/Notional Amount (mm)		Weighted Average Life (Years)	Discount Margin	Coupon	Dollar Price
AL	$138.446		9.51	17	1 mo LIBOR + 17	100.000
AS	$893.626		9.58	21	30-day SOFR avg + 21	100.000
XL	Non-Offered
XS	Non-Offered

Details

• Co-Lead Managers and Joint Bookrunners: Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC
• Co-Managers: BofA Securities, Inc., Brean Capital, LLC, Drexel Hamilton, LLC and Wells Fargo Securities, LLC

Related Links

• The K-F98 preliminary offering circular supplement: http://www.freddiemac.com/mbs/data/kf98oc.pdf
• Freddie Mac Multifamily Securitization Overview
• Multifamily Securities Investor Access database of post-securitization data from Investor Reporting Packages
  

The K-F98 Certificates will not be rated, and will include two senior principal and interest classes and two interest-only classes that are also entitled to static prepayment premiums. The K-F98 Certificates are backed by corresponding classes issued by the FREMF 2021-KF98 Mortgage Trust (KF98 Trust) and guaranteed by Freddie Mac. The KF98 Trust will also issue certificates consisting of the Class CL, CS and R Certificates, which will be subordinate to the classes backing the K-F98 Certificates and will not be guaranteed by Freddie Mac.

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, 2019, filed with the Securities and Exchange Commission (SEC) on February 13, 2020; 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, 2019, 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, 2019, 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 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: Michael Morosi
(703) 918-5851
Michael_Morosi@FreddieMac.com
INVESTOR CONTACTS: Robert Koontz
571-382-4082
Amanda Nunnink
312-407-7510

FAQ

What are the details of Freddie Mac's new K-F98 Certificates offering?

Freddie Mac has priced approximately $1 billion in K-F98 Certificates, backed by floating-rate multifamily mortgages with 10-year terms, set to settle on February 11, 2021.

What is the purpose of Freddie Mac's K-F98 Certificates?

The K-F98 Certificates aim to transfer a portion of the risk of losses from taxpayers to private investors, contributing to the company's strategy.

Who are the co-lead managers for Freddie Mac's K-F98 offering?

Goldman Sachs and J.P. Morgan are the co-lead managers and joint bookrunners for the K-F98 Certificates.

Are the K-F98 Certificates rated?

No, the K-F98 Certificates will not be rated but are guaranteed by Freddie Mac.

What interest rates are the K-F98 Certificates based on?

The K-F98 Certificates include classes of senior bonds indexed to the Secured Overnight Financing Rate (SOFR) and the London Interbank Offered Rate (LIBOR).