Federal Home Loan Mortgage Corp (OTCBB:FMCC) announced a third offering of multifamily K-deal of the year. K certificates are structured pass-through certificates that consist of multifamily mortgage-backed securities. The company intends to issue almost $1.2 billion K-043 certificates. They are expected to settle on or around March 4, 2015.
The third K Certificates offering of Federal Home Loan are backed by 81 multifamily mortgages. The certificates are guaranteed by Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA). The K certificates will be offered to the buyers by a group of deals led by Merrill Lynch and Barclays Capital Inc. The co-lead managers and joint book runner appointed are Pierce and Fenner & Smith. Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC, and Bonwick Capital Partners, LLC will serve as co-managers.
The K-043 certificates
The K-043 certificates comprise two senior interest and principal classes, one junior interest only class and one senior interest only class. The three senior classes are anticipated to get “AAAsf” rating by Fitch Ratings, Inc. Further, Federal Home Loan Mortgage Corp (OTCBB:FMCC) expects senior classes to get rating of ’AAA(sf)’ by rating firm, Kroll Bond Rating Agency, Inc. Both ratings are subject to ongoing monitoring.
The K certificates offering of Federal Home Loan Mortgage Corp (OTCBB:FMCC) are backed by corresponding classes issued by the K-43 trust and guaranteed by Federal National. The trust will issue certificates comprising classes B, C, X2-A, X2-B, R and D certificates. However, these will not be guaranteed by Federal National Mortgage.
Federal Home Loan Mortgage Corp (OTCBB:FMCC) Multifamily is a prominent issuer of structured multifamily securities. The K certificates are part of its business plan to transfer a part of the risk of losses away from taxpayers to private investors. These are the investors who buy the unguaranteed subordinate bonds. The K offerings feature numerous investment options with structured credit enhancement and stable cash flows.