Freddie Mac Prices $838 million Multifamily K-Deal, K-1520

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) has announced the pricing of a new offering of Structured Pass-Through Certificates, specifically K-1520 Certificates. The total issuance is expected to be approximately $838 million, with settlement projected for April 15, 2021. The certificates are backed by multifamily mortgage-backed securities that aim to transfer risk from taxpayers to private investors. The detailed pricing includes various class categories, weighted average life, coupons, and yields, crucial for investor decision-making.

Positive

• Issuance of approximately $838 million in K-1520 Certificates enhances liquidity.
• K-1520 Certificates provide structured credit enhancement options for investors.

Negative

• Certificates are complex financial instruments, which may pose risks to inexperienced investors.

MCLEAN, Va., April 08, 2021 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are multifamily mortgage-backed securities. The company expects to issue approximately $838 million in K Certificates (K-1520 Certificates), which are expected to settle on or about April 15, 2021.

K-1520 Pricing

Class	Principal/Notional Amount (mm)		Weighted Average Life (Years)	Spread (bps)	Coupon	Yield	Dollar Price
A-1	$229.514		11.07	S + 23	2.00700%	2.00174%	$99.9998
A-2	$609.064		14.76	S + 33	2.43800%	2.27693%	$101.9916
X1	$838.578		13.53	T + 130	0.47180%	3.15134%	$5.3376
X3	$67.994		14.65	T + 310	3.09184%	5.01692%	$32.3440

Details

• Co-Lead Managers and Joint Bookrunners: Credit Suisse Securities (USA) LLC and Citigroup Global Markets Inc.
• Co-Managers: Baird, BofA Securities, Inc., Drexel Hamilton, LLC and Wells Fargo Securities, LLC

Related Links

• The K-1520 Preliminary Offering Circular Supplement: http://www.freddiemac.com/mbs/data/0k1520oc.pdf
• Freddie Mac Multifamily Securitization Overview
• Multifamily Securities Investor Access database of post-securitization data from Investor Reporting Packages
  

The K-1520 Certificates are backed by corresponding classes issued by the FREMF 2021-K1520 Mortgage Trust (K-1520 Trust) and guaranteed by Freddie Mac. The K-1520 Trust will also issue certificates consisting of the Class X2-A, Class X2-B, Class C and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-1520 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 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 new K-1520 Certificates offering?

The K-1520 Certificates offering is significant as it represents a liquidity enhancement of approximately $838 million, transferring risk away from taxpayers to private investors.

When is the expected settlement date for the K-1520 Certificates?

The expected settlement date for the K-1520 Certificates is April 15, 2021.

What are the classes involved in the K-1520 Certificates?

The K-1520 Certificates include various classes such as A-1, A-2, X1, and X3, each with specific principal amounts, weighted average lives, and yields.

How does the K-1520 Certificates offering affect FMCC investors?

The K-1520 Certificates offering provides FMCC investors with stable cash flow options while potentially increasing their exposure to multifamily mortgage-backed securities.