Freddie Mac (FRE) sold $6 billion of three-year reference notes Tuesday.

The deal, which was announced Monday, saw its order book balloon to $12 billion mostly on demand from domestic investors.

The tightening of credit spreads helped firm up the price on the deal to 46.5 basis points from its initial launch at 49 basis points over comparable Treasury yields.

Some market participants say there saw a surge in demand for this issue on talk that Freddie may cancel its scheduled sale of another benchmark note on Thursday. The mortgage company, however, said it officially hasn't made an announcement on that yet.

The notes, with a coupon of 1.75%, were priced at 99.676 to yield of 1.859%. The deal, with Barclays Capital, J.P. Morgan and Banc of America Securities, is expected to settle Thursday.

With this, Freddie has issued $36 billion of reference notes debt securities this year, and has approximately $259 billion of these bonds and notes outstanding.

Meanwhile, risk premiums on most agency securities tightened Tuesday morning.

The existing Freddie three-year note - 2.125% due 2012 - was trading 0.5 basis points tighter at 34.5/31.5, according to Tradeweb data.

-By Prabha Natarajan, Dow Jones Newswires, 201-938-5071; prabha.natarajan@dowjones.com