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. Freddie said that the deal wasn't announced from until the settlement date because of an abundance of caution, due to the multiple parties that needed to sign off before the deal settled.

The deal is meant to be the first of many multi-family securitizations for Freddie Mac. The government-controlled mortgage giant had traditionally bought multi-family mortgages to hold, but now it's trying to move away from that to free up more capital for lending.

The new model will be "buy and distribute," said David Brickman, Freddie's vice president of multifamily and CMBS capital markets.

"The key differentiation here, and why we can do this and others can't, is that we can bring our guarantee to bear," Brickman said.

Since the government took the company over that guarantee is backed by the U.S. government, allowing the deal to price at extremely low yields. 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. Brickman said the comparable triple-A yield in the secondary market would be north of 10%.

Brickman said that, on one level, the deal is meant to show the way forward for other issuers. The idea is that multi-family CMBS issuers could adopt something like the old mono-line insurer model, but instead of insuring the bonds offering a "guarantee," which still allows the company to move the risk off its books.

In addition to the guarantee, the deal includes for a 7.5% "equity" cushion, that takes the first loss if there are defaults on the underlying mortgages. This piece was bought by Helix Financial Group LLC, AllBridge Investments and Waterton Associates.

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 from the 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