Freddie Mac [1] Monday announced the pricing of its fifth Freddie Mac Whole Loan Securities [2] transaction. The offering was worth roughly $640 million in guaranteed senior and non-guaranteed subordinate actual loss securities, according to Freddie.
According to Freddie, its Whole Loan Securities (WLS) Trust will issue approximately $602 million in guaranteed senior certificates and approximately $38 million in unguaranteed subordinate certificates. The collateral backing the certificates are 1,227 fixed-rate super-conforming loans.
Barclays Capital Inc [3]. and Bank of America Merrill Lynch [4] are co-lead managers and joint bookrunners. WLS 2017-SC01 is expected to settle later this month.
The transaction was made possible through credit risk transfers, or CRTs. Freddie stated that it has shifted some of its credit risk from the underlying super-conforming mortgages to subordinate investors. To date, the company has issued approximately $2.4 billion in whole loan securities.
Whole loan securities are risk transfer securitizations backed by single-family mortgages purchased by Freddie Mac. Principal and interest payments on the underlying mortgage loans provide the funds for payment of certain expenses of the whole loan securitization trust and for distributions of principal and interest to investors.
"We are pleased with the interest in our first WLS transaction of 2017, the largest WLS deal to date," said Mike Reynolds, VP of Freddie Mac Credit Risk Transfer. “Our work to educate investors about this asset class is ongoing and we look forward to continued strong investor interest in WLS."