Freddie Mac’s Structured Agency Credit Risk (STACR) series shows no signs of slowing as it approaches its third anniversary. On Friday, Freddie Mac announced its intention to sell the 21st STACR debt notes offering overall in order to transfer more credit risk on single-family loans to private capital market investors.
Last year, Freddie Mac exceeded by $90 billion the goal of laying off $120 billion in credit risk for the full year of 2015 as set forth by the FHFA’s conservatorship scorecard—eventually laying off $210 billion in credit risk for the full year through STACR.
“Single-family risk transfer was zero a few years ago by comparison. Now it's a fast-moving field,” Freddie Mac CEO Donald Layton said. “The instruments we use are growing and evolving. We're also doing this with sound economics. It's very exciting.”
While the conservatorships continue, so do the Enterprise’s initiatives to ease the risk for taxpayers by further involving investors in the private capital market. The STACR offering announced by Freddie Mac on Friday (STACR 2016-HQA2) is the fourth of 2016. JPMorgan and Citigroup will serve as co-lead managers and joint bookrunners on the transaction.
The LTVs of the loans in STACR 2016-HQA2 range from 80 to 95 percent, and the single-family mortgages contained in the reference pool have an aggregate unpaid principal balance (UPB) of $18.4 billion. All of the mortgages in the reference pool are 30-year fixed-rate mortgages recently acquired by Freddie Mac, according to the announcement.
Freddie Mac was the first agency to use STACR and Agency Credit Insurance Structure (ACIS) to market credit risk transfer transactions; in just two years, the investor base has grown to include more than 170 unique investors, according to Freddie Mac. In order to help investors plan their allocations, Freddie Mac has published a STACR issuance calendar on the Credit Risk Offerings page of its website.