Freddie Mac priced its inaugural $1.25 billion Reference REMIC transaction to great fanfare last week, achieving a 50% oversubscription rate for the 15-year Gold 5% backed deal. Reference REMIC R-001, class AE, a guaranteed maturity class with an April 15, 2015 final, tightened to a 74/73 bid/ask on the break, after pricing at 75 basis points over an interpolated Treasury curve. Settlement is scheduled for April 22.
Mark Hanson, vice president of mortgage funding at Freddie, cited the deal's liquidity and broad investor participation as the reasons for the deal's successful execution. The offering priced tighter than it would otherwise have, due to its unique features, such as the 17 dealers involved in the syndicate process and its pricing transparency (see ASR 4/4/2005), Hanson added. Additionally, the guaranteed final maturity appealed to asset-backed investors and limits extension risk as rates rise.