Freddie Mac announced its first offering of structured passthrough certificates or K certificates backed only by multifamily mortgages with a seven-year term.
The GSE expects to offer around $861 million in K certificates, which should price the week of Feb. 21 and settle on or about March 9.
The K-701 certificates will be offered to the market through a syndicate of dealers led by Morgan Stanley and JPMorgan Securities, who will serve as co-lead managers and joint bookrunners for the transaction.
Barclays Capital, Citigroup Global Markets, Credit Suisse, Deutsche Bank Securities, Goldman, Sachs, Jefferies & Co., Merrill Lynch and Wells Fargo Securities have been named as co-managers for the deal. The K-701 certificates are collateralized by 44 recently originated multifamily mortgages and are guaranteed by Freddie Mac.
"We are very pleased to offer our first '700-series' of K Certificates, which are comprised entirely of multifamily mortgages with an original maturity of 7-years," said David Brickman, vice president of Multifamily CMBS Capital Markets for Freddie Mac. "Because of the strong growth in our multifamily mortgage purchases, we can now tailor securities that segregate our collateral by maturity and provide tighter principal windows to better meet the specific needs of investors. Going forward, we hope to issue K Certificate securities backed by specific collateral such as 5- and 10-year multifamily mortgages."
K certificates offer Freddie Mac with a way to efficiently securitize multifamily loans. The certificates provide investors with stable cash flows, structured credit enhancement and the Freddie Mac guaranty.
The preliminary offering circular supplement relating to the K-701 Certificates can be found at http://www.freddiemac.com/mbs/data/k701oc.pdf.
Meanwhile, at the beginning of the month, StrcuturedFinanceNews.com reported that Fannie Mae introduced its Fannie Mae Guaranteed Multifamily Structures or Fannie Mae GeMS.
This is an expanded multifamily MBS that will include DUS Megas, DUS REMICs and syndicated DUS Megas.
Syndicated Mega deals will be managed by broker-dealers and offered in issuance sizes similar to DUS REMIC offerings, the GSE said in a press release.
This expansion adds to Fannie Mae's Delegated Underwriting & Servicing (DUS) REMIC issuances, offering added Fannie Mae GeMS products with similar features and liquidity.