Freddie Mac (FRE) priced a $3 billion five-year reference note to yield 3.054%, a significantly higher yield than its last note.

The notes, due July 28, 2014, came at a price of 99.743 cents on the dollar. This compares with the price five-year notes fetched in April of 99.781 cents on the dollar.

The pricing is significantly richer than where 5-year notes are currently trading. The spread, or risk premium on the new deal, is 41.3 basis points over the comparable Treasury note. Five-year Freddie notes currently trade in the secondary market as tight as 19 basis points over Treasurys, according to Tradeweb.

According to a person familiar with the deal, Freddie originally tried to offer the new deal flat to the current rate in the secondary market, as had been the practice before the credit crisis last fall. That idea fell flat with marginal players, hedge funds who have been buying the deal at a concession and then selling them back Federal Reserve at the secondary market price.

In response, Freddie was forced to boost the price and demand came back, the person said.

The deal was led by co-managers Citigroup Global Markets, Inc., RBS Greenwich Capital and UBS Investment Bank. Terms were as follows:

 
Amount:         $3 billion 
Maturity:       July 28, 2014 
Coupon:         3.00% 
Issue Price:    99.743 
Yield:          3.054% 
Spread:         41.3 basis points over Treasurys 
Settlement:     June 19, 2009 
Call:           Noncallable

-By Andrew Edwards, Dow Jones Newswires; 212-416-2228; andrew.edwards@dowjones.com