Freddie Mac Announces Twelfth Multifamily Securities Offering This Year, K-503

MCLEAN, VA--(Marketwired - Oct 14, 2014) - Freddie Mac (OTCQB: FMCC) today announced a new offering of Structured Pass-Through Certificates ("K Certificates") backed primarily by fixed-rate multifamily mortgages with 5-year terms. The company expects to issue approximately $1 billion in K Certificates ("K-503 Certificates"), which are expected to price the week of October 14, 2014, and settle on or about October 29, 2014. This is Freddie Mac's twelfth K Certificates offering this year.

The K-503 Certificates are backed by 36 recently-originated multifamily mortgages and are guaranteed by Freddie Mac. The K-503 Certificates will be offered to the market by a syndicate of dealers led by Wells Fargo Securities, LLC and Barclays Capital Inc. as co-lead managers and joint bookrunners. J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mischler Financial Group, Inc. and Morgan Stanley & Co. LLC will serve as co-managers.

"As we enter what is expected to be a busy fourth quarter, we're bringing to market our third K-deal transaction backed entirely by 5-year collateral, which is one indication that borrowers are still interested in shorter-term financing at the right price and terms," said Mitchell Resnick, vice president of Freddie Mac Multifamily Capital Markets.

He added, "Since the program's inception in 2009, we have securitized approximately $4 billion of 5-year loans backed by 160 properties containing over 55,000 units, the majority of which are affordable. This transaction will increase the total volume to well over $5 billion in collateral. While we continue to finance and help preserve an adequate supply of rental housing, we also employ a business strategy that shifts substantially all of the risk away from the taxpayer by selling it to private investors."

The K-503 Certificates include two senior principal and interest classes, one senior interest only class and one junior interest only class. Kroll Bond Rating Agency, Inc. and Moody's Investors Service, Inc. are rating the three senior classes, which are each expected to receive ratings of "AAA(sf)" and "Aaa(sf)", respectively, subject to ongoing monitoring. 

The K-503 Certificates are backed by corresponding classes issued by the FREMF 2014-K503 Mortgage Trust ("K-503 Trust") and guaranteed by Freddie Mac. The K-503 Trust will also issue certificates consisting of the Class X2-A, X2-B, B, C, D and R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-503 Certificates.