Freddie Mac put out the bid list for its $1 billion RMBS sale today. The GSE confirmed that sale is part of a $5 billon program it will execute in 2013.
A spokesperson said that the initial deal is backed by “subprime loans and a large portion are investment grade.”
Freddie Mac will sell non-agency RMBS from its $121.5 billion portfolio over the course of 2013. Its first sale this month will likely be followed by second $1 billion sale in June, said the spokesperson.
The sale will go some way towards the GSEs directive to sell 5% of non-agency assets from their retained portfolios this year. JP Morgan said that Freddie “would have to sell close to $17 billion of assets altogether this year” to meet the goal of shedding 5% of its non-agency assets. “If they limited securities sales to $5 billion this year that would mean selling $12 billion in loans on top of this.”
Freddie and Fannie Mae's combined non-agency portfolios consist of roughly $190 billion in non-agency MBS/CMBS and $600 billion in loans, according to a May 10, JP Morgan report.
Freddie holds $121.5 billion of non-agency securities in its portfolio, including non-agency MBS and CMBS, as well as $212.5 billion loans (about half of which are nonperforming), accounting for $334 billion in non-agency mortgage assets.
Analysts at Bank of America Merrill Lynch said in a report on Friday that while the limited size of the planned sales, isn’t likely to have any significant impact on the market, it may serve as a trial phase for larger portfolio sales in the future.
he GSE non-agency mortgage securities is made up of 36% noninvestment grade subprime, 10% non- investment grade option arms, 11% non-investment grade Alt-A, and 40% CMBS (37.6% investment grade and 2.4% non-investment grade), according to JP Morgan.