Fannie Mae priced its third offering of Connecticut Avenue risk-sharing notes at significantly tighter spreads than its previous offering in February.

The $1.6 billion Connecticut Avenue Securities, Series 2014-CO2 are general senior unsecured obligations, but are subject to the credit and principal payment risk of a pool of residential mortgage loans guaranteed by Fannie Mae. By at least one measure, the loans in this pool are riskier than those backing the previous transaction: they represent as much as 97% of the value of a home. Previous C-deal offerings included reference loans with loan-to-value ratios of up to 80%.

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