Freddie Mac Settles CMBS Pass-Through Offering
June 18 2009 - 2:08PM
Dow Jones News
Freddie Mac (FRE) settled a $1 billion commercial
mortgage-backed security deal, marking the first CMBS deal of its
type since the credit crisis began.
Commercial mortgage-backed securities have been hard-hit in the
current crisis. The securities, which cover multifamily homes and
other larger commercial properties, require large amounts of
capital to refinance when they come due. That was simple enough in
the days of easy credit and all but impossible now. Freddie's deal
is in some way meant to catalyze this stalled market.
"This deal is the first of what we hope are many of these
securitizations," said Freddie spokesman Michael Cosgrove, in an
earlier interview on the deal. "There hasn't been any CMBS deal
like this in over year."
The deal priced on June 5 but only settled Thursday afternoon.
The deal's most senior tranche, the part of the deal that is most
safe for investors, has been priced to yield 2.225% and was more
than six times oversubscribed. Yields jumped significantly for the
less-protected tranches, starting at 3.607% in the next lower
tranche, and peaking at 5.085%.
The less-protected tranches, though oversubscribed, were
significantly less popular. The A-4 level, four notches fromthe top
and yielding 5.085%, was only 10% oversubscribed.
Freddie Senior Vice President for Multifamily Mike May said in a
release that the company was "pleased with the positive response
from investors and customers."
The company said it expects to offer more multifamily
transactions in the future.
"We expect to ... see a growing volume of multifamily loans
coming through our [Capital Markets Execution] pipeline," said
David Brickman, Freddie's vice president of multifamily and CMBS
capital markets.
Since the launch of Freddie Mac's multifamily business in 1993,
it has provided more than $214 billion in financing for 56,000
multifamily properties, according to the company release.
-By Andrew Edwards, Dow Jones Newswires; 201-938-5973;
andrew.edwards@dowjones.com