Freddie Mac continues credit risk-sharing efforts in 2016

Picking up where it left off in 2015, Freddie Mac announced that they would continue making credit risk-sharing deals through their Structured Agency Credit Risk Series in 2016, detailing the first on January 5. The sale of debt notes of $996 million — subject to market conditions — is the ninth deal made by STACR and the first of 2016.

“We have demonstrated our ability to execute credit risk transactions on a regular basis with a standard structure and have been transparent in our disclosures,” said Mike Reynolds, Freddie Mac vice president of Credit Risk Transfer. “Our loans are subject to Freddie Mac’s underwriting standards, internal fraud prevention and quality control review process. We are finding with each issuance that STACR is more diverse, liquid and durable.”

Freddie Mac has said they are planning eight more deals in 2016 whereby the mortgage giant will transfer a portion of its credit risk on certain single-family loans to private capital markets investors. The total offering consists of a reference pool of recently acquired single-family mortgages with an unpaid principal balance of roughly $35.7 billion — still only a small fraction of its total of $385 billion of unpaid principal balance in single-family mortgages.

“The issuance calendar is the next step in our efforts to be clear and transparent in our credit risk transfer offerings,” said Reynolds.

The team running the endeavor is made up of Bank of America Merrill Lynch and J.P. Morgan will serving as co-lead managers and joint bookrunners, Barclays, Citigroup, Credit Suisse and Wells Fargo as co-managers, and Williams Capital is a selling group member.

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