MCLEAN, VA - Freddie Mac announced a new offering of Structured Pass-Through Certificates ("K Certificates") which are multifamily mortgage-backed securities. The company expects to issue approximately $1.1 billion in K Certificates ("K-042 Certificates"), which are expected to price the week of January 12, 2015, and settle on or about January 28, 2015. This is the first K Certificate offering this year.
The K-042 Certificates are backed by 78 recently-originated multifamily mortgages and are guaranteed by Freddie Mac. The K-042 Certificates will be offered to the market by a syndicate of dealers led by J.P. Morgan Securities LLC and Barclays Capital Inc. as co-lead managers and joint bookrunners. Jefferies LLC, Morgan Stanley & Co. LLC, The Williams Capital Group, L.P. and Wells Fargo Securities, LLC will serve as co-managers.
The K-042 Certificates include two senior principal and interest classes, one senior interest only class and one junior interest only class. Moody's Investors Service, Inc. and Morningstar Credit Ratings, LLC are rating the three senior classes of K-042 Certificates, which are each expected to receive a rating of "Aaa(sf)" and "AAA," respectively, subject to ongoing monitoring.
The K-042 Certificates are backed by corresponding classes issued by the FREMF 2015-K42 Mortgage Trust ("K-42 Trust") and guaranteed by Freddie Mac. The K-42 Trust will also issue certificates consisting of the Class B, C, D, X2-A, X2-B and R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-042 Certificates.
Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Deals are part of the company's business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders.