The Federal Deposit Insurance Corp. (FDIC) closed on a sale of securities as part of a securitization backed by around $394.3 million of performing commercial and multi-family mortgages from 13 failed banks.
The investors for the Class A senior certificates represented a wide variety of organizations, including banks, insurance companies and money managers, which paid par for the senior certificates. The Class B mezzanine and Class C subordinate classes were purchased by an affiliate of LNR Partners.
This pilot transaction marks the first time the FDIC has sold commercial mortgage loans in a securitization since the beginning of the recent financial crisis.
The pilot transaction consisted of three classes of securities. Senior certificates of $315.4 million represented 80 percent of the capital structure and will be guaranteed by the FDIC in its corporate capacity. These senior certificates sold at a fixed-rate coupon of 1.84 percent and are expected to have an average life of 2.6 years.
Approximately $39.4 million of mezzanine certificates represented 10% of the capital structure. These certificates sold at a fixed-rate coupon of 5% and are expected to have an average life of 6.5 years. The subordinate class also totaled $39.4 million and represented the most junior 10 percent of the capital structure. These certificates sold at a fixed-rate coupon of 5% and are expected to have an average life of 7.1 years. The mezzanine and subordinate certificates are not guaranteed by the FDIC.
The lead underwriter and bookrunner was Wells Fargo Securities. Barclays Capital and CastleOak Securities, a minority-owned firm acted as co-underwriters on the deal.