OREANDA-NEWS. Freddie Mac (OTCQB: FMCC) expands its support of workforce housing with a new series of K Certificates multifamily mortgage-backed security. The K-W Series offerings of Structured Pass-Through Certificates (K Certificates) are backed by loans on multifamily properties where rent is affordable to the majority of low- to middle-income households in a geographic location.

The company expects to issue approximately $608 million in K-W01 Certificates, which are expected to settle on or about May 26, 2016. The K-W01 Certificates are guaranteed by Freddie Mac and are backed by a majority of mortgages in which the properties have rents that are less than the average market rent for the area and are affordable to individuals earning 80 percent or less of the area median Income in areas other than high cost housing markets. The loans were originated through the company's workforce housing loan initiative.

"This K-Deal is important because it brings an additional private capital focus to support workforce housing, which accounts for only a fraction of new multifamily supply across the country," said Robert Koontz, vice president of Multifamily Capital Markets.

 
K-W01 Pricing
 
Class   Principal/ Notional Amount (mm)   Weighted Average Life (Years)   Spread (bps)   Coupon   Yield   Dollar Price
A-1   $173.567   6.78   S + 75   2.5870%   2.2502%   $101.9944
A-2   $435.000   9.36   S + 80   2.8530%   2.4838%   $102.9978
X1   $608.567   8.36   T + 335   1.1182%   5.0855%   $6.9067
X3   $33.809*   9.44   T + 850   4.1948%   10.3029%   $24.8258
                         
    * 50% of the Class X3 notional size    
     

Details

  • Lead Manager and Sole Bookrunner: J.P. Morgan Securities LLC
  • Co-Managers: Citigroup Global Capital Markets Inc., Goldman, Sachs and Co., Stern Brothers & Co., and Wells Fargo Securities, LLC

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The K-W01 Certificates are backed by corresponding classes issued by the FREMF 2016-KW01 Mortgage Trust (K-W01 Trust) and guaranteed by Freddie Mac. The K-W01 Trust will also issue certificates consisting of the Class X2-A, X2-B, B and R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-W01 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 securities of Freddie Mac or any other issuer. 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, 2015, filed with the Securities and Exchange Commission (SEC) on February 18, 2016; 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, 2015, 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.