Freddie Mac intends to sell its sixth offering this year of Structured Agency Credit Risk (STACR) debt notes, pending market conditions, according to a recent release from the GSE.
Freddie Mac states that through the STACR program, the GSE is able to transfer a significant portion of the mortgage credit risk on certain single-family loans to private capital market investors.
For this particular STACR pool, Bank of America Merrill Lynch and Goldman, Sachs & Co. will serve as co-lead managers and joint bookrunners.
The report states that with the STACR 2016-HQA3 offering of loans with LTVs ranging from 80 to 95 percent, Freddie Mac holds the senior loss risk in the capital structure and a portion of the risk in the Class M-1, M-2 and M-3 tranches, and the first loss Class B tranche.
Additionally, Freddie Mac says that STACR 2016-HQA3 has a reference pool of single-family mortgages with an unpaid principal balance of more than $15.7 billion. The reference pool consists of a subset of 30-year fixed-rate single-family mortgages acquired by Freddie Mac.
Freddie Mac notes that they are the first agency to market these types of credit risk transfer transactions and that the company has since grown its investor base to more than 200 unique investors, including insurers and reinsurers. In addition, Freddie Mac says that since 2013, the company has transferred a significant portion of credit risk on approximately $527 billion of UPB on single-family mortgages. Freddie Mac also has a STACR issuance calendar to help investors plan their allocations.
The report also states that offerings 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. They also include 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. Additionally, they include 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.