Freddie Mac Prices New $3 Billion Reference Note To Yield 3.054%
June 17 2009 - 12:30PM
Dow Jones News
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