Freddie Mac [1]’s highly successful Structured Agency Credit Risk (STACR [2]) program, through which the Enterprise transfers a portion of credit risk on single-family mortgage loans to investors in the private market, has priced its first debt notes offering of 2016 at $996 million, according to an announcement from Freddie Mac on Wednesday.
The latest STACR offering (STACR-2016 DNA1) is the first of eight that Freddie Mac plans to issue in the first 10 months of 2016. This offering includes a reference pool of single-family mortgage loans recently acquired by Freddie Mac, and the aggregate unpaid principal balance of the loans exceeds $35.7 billion.
“We are quickly starting off the year with an issuance and expect to have eight STACR offerings through October as reflected in our published deal calendar [3],” said Mike Reynolds, VP of Freddie Mac Credit Risk Transfer. “With current market conditions we are pleased to sell a billion dollars of credit bonds and believe it reflects investors' positive view of the company's credit fundamentals.”
The offering is scheduled to settle on or around January 21, 2016.
Freddie Mac was the first agency to market credit risk transfer transactions through STACR, Whole Loan Security (WLS), and Agency Credit Insurance Structure (ACIS) programs. In two and a half years since the first STACR offering in mid-2013, Freddie Mac’s investor base has grown to include approximately 190 unique investors, which includes reinsurers.
“With current market conditions we are pleased to sell a billion dollars of credit bonds and believe it reflects investors' positive view of the company's credit fundamentals.”
Freddie Mac
Through the three programs, Freddie Mac has succeeded in the transferring of a substantial portion of credit risk on more than $385 billion of UPB in single-family mortgages backed by the Enterprise.
Fannie Mae has followed its fellow GSE’s lead in risk sharing with two programs of its own starting with the Connecticut Avenue Securities (CAS) series in September 2013 and the Credit Insurance Risk Transfer (CIRT) program in 2014. Through the CAS series, Fannie Mae has sold more than $12.4 billion in securities to private investors, which covers $438 billion worth of mortgage loans.
Click here to view an issuance calendar for Freddie Mac’s STACR offerings in 2016 [4].