Freddie Mac Prices New STACR HQ2 Credit Risk Sharing Transaction of Higher LTV Loans

MCLEAN, VA--(Marketwired - Sep 10, 2014) - Freddie Mac (OTCQB: FMCC) priced a new Structured Agency Credit Risk (STACR®) transaction today totaling $770 million. This STACR Series 2014-HQ2 represents the fifth STACR offering this year where Freddie Mac is transferring a portion of its credit risk on certain groups of loans to private investors. Freddie Mac completed its first HQ Series transaction last month of loans with LTVs of above 80% and up to 95%.

Pricing for the STACR Series 2014-HQ2 M-1 class was one-month LIBOR plus a spread of 145 basis points. Pricing for the M-2 class was one month LIBOR plus a spread of 220 basis points. Pricing for the M-3 class was one month LIBOR plus a spread of 375 basis points. The offering is scheduled to settle on or around September 15, 2014.

STACR Debt Notes, Series 2014-HQ2 were offered to the market by Barclays and RBS Securities as co-lead managers and joint bookrunners. J.P. Morgan, Credit Suisse and Bank of America Selling Group served as co-managers, and Bonwick Capital as a selling group member.

"We continue to make STACR more appealing to a broader investor base. We listed the STACR bonds on the Global Exchange Market of the Irish Stock Exchange and have preliminary designations of credit quality from the National Association of Insurance Commissioners for all three HQ2 bonds," said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac. "This offering builds on the STACR platform and shows the flexibility Freddie Mac has as an issuer as we are selling only the HQ Series collateral in this offering for the first time instead of doing it at the same time as our STACR DN Series."

The NAIC preliminary designations are NAIC2 for the M-1 class, NAIC4 for the M-2 and M-3 classes.

The Series 2014-HQ2, M-1 class has 4.1% subordination and received investment grade ratings of A-(sf) from Fitch and A2(sf) from Moody's, subject to ongoing monitoring. The M-2 class has 2.25% subordination and received investment grade ratings of BBB-(sf) from Fitch and Baa2(sf) from Moody's, subject to ongoing monitoring. The M-3 class was not rated and has .60% subordination. The M-1, M-2 and M-3 Classes of the Series 2014-HQ2 have an exchangeable feature giving investors the option to either combine pro-rata portions of the cash flows from the M-1, M-2 and M-3 classes or strip off a portion of the interest from any class to create bonds with different margins.