Freddie Mac Announces First Floating Rate K Certificates Offering Backed by Multifamily Mortgages

Freddie Mac today announced its first offering of Structured Pass-Through Certificates (“K Certificates”) backed exclusively by LIBOR-based, floating rate multifamily mortgages with five- and seven-year terms.

McLean, Va.—Freddie Mac today announced its first offering of Structured Pass-Through Certificates (“K Certificates”) backed exclusively by LIBOR-based, floating rate multifamily mortgages with five- and seven-year terms. The company expects to offer approximately $1.1 billion in K Certificates (“K-F01 Certificates”), which are expected to price the week of October 1, 2012, and settle on or about October 25, 2012. This is Freddie Mac’s thirteenth K Certificate offering this year.

The K-F01 Certificates will be offered to the market by a syndicate of dealers led by J.P. Morgan Securities LLC and Barclays Capital Inc. as co-lead managers and joint bookrunners. Guggenheim Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, UBS Securities LLC and Wells Fargo Securities, LLC will serve as co-managers. The K-F01 Certificates are backed by 80 recently-originated multifamily mortgages and are guaranteed by Freddie Mac.

The K-F01 Certificates include one senior principal and interest class, and one interest only class. Rating agencies Moody’s Investors Service, Inc. and Kroll Bond Rating Agency, Inc. have been engaged to rate the K-F01 Certificates. The principal and interest class is expected to receive ratings of “Aaa(sf)” and “AAA(sf)”, and the interest only class is expected to receive ratings of “Ba3(sf)” and “AAA(sf)” in each case from those respective agencies. The ratings will be subject to on-going monitoring.

Freddie Mac is a leading issuer of agency-guaranteed structured multifamily securities.

K Certificates feature a wide range of investor options with stable cash flows and a structured credit enhancement. K-deals include guaranteed senior principal and interest, and interest only classes.