Freddie Mac Offers 11th Batch of K Certificates This Year

Freddie Mac has made a new offering of Structured Pass-Through Certificates (also known as “K Certificates"), which are expected to settle on Sept. 25. The K Certificate offering, which is composed of multifamily mortgage-backed securities, will total about $1.1 billion.

McLean, Va.—Freddie Mac has made a new offering of Structured Pass-Through Certificates (also known as “K Certificates”), which are expected to settle on Sept. 25. The K Certificate offering, which is composed of multifamily mortgage-backed securities, will total about $1.1 billion.

This group of K Certificates (K-020, to use their technical designation) are backed by 77 multifamily mortgages of recent vintage. The certificates will be offered to the market by a syndicate led by Morgan Stanley & Co. and Wells Fargo Securities as co-lead managers and joint bookrunners. Barclays Capital, Guggenheim Securities, J.P. Morgan Securities and UBS Securities will serve as co-managers.

The K-020 Certificates include two senior principal and interest classes, one senior interest-only class and a junior interest-only class. Fitch and Kroll Bond Rating Agency will rate the three senior classes, which are each expected to receive a rating of AAA(sf) from each rating agency.

This is the GSE’s 11th K Certificate offering during 2012, and the offerings are increasing in total value. During the first half of the year, Freddie Mac brought K Certificates to the market backed by about $10 billion worth of mortgages. During the same period in 2011, the total was $7.7 billion.

Overall, Freddie Mac has recovered somewhat from the darkest days of the housing collapse. The GSE’s earnings in the first half of 2012 were about $942 million, compared with $559 for the first half of 2011, and $1.3 billion for all of last year.