The Federal Deposit Insurance Corp. (FDIC) late Friday sold $400 million worth of securities as part of a pilot MBS aimed at clearing out billions of dollars of performing loans at receiverships.
The investors in three tranches were not named by the agency. The FDIC said the bidders "represented a wide variety of organizations" that paid par for the senior certificates.
The size of the entire offering is $471.3 million. The single family loans were culled from 16 failed banks.
The $400 million of senior certificates (the assets sold Friday) represented 85% "of the capital structure" and are guaranteed by the FDIC. The fixed-rate, senior note sold at a coupon of 2.184% and is expected to have an average life of 3.66 years.
The subordinated certificates are comprised of a mezzanine and an over collateralization class representing 15% of the capital structure. The subordinated certificates will be retained by the failed bank receiverships, which may sell all or a portion at some point in the future.
National Mortgage News broke the news on the deal two weeks ago. At one point. it was believed the bond size might be as large as $800 million to $1 billion.
The senior certificates will not be registered with the Securities and Exchange Commission and were offered and sold in reliance on a federal exemption. The lead underwriter on the deal was RBS Securities.
Bidders on the security were asked to post about $50,000 in cash before they could look at the offering materials.
The money the agency receives on the sale of the security will help it pay for bank resolutions. "They would like the cash upfront," said one advisor to agency.