WASHINGTON, DC-Freddie Mac has brought its thirteenth K-Certificates backed by seven-year multifamily mortgages to the market in a $1.3 billion deal, expected to price around May 31. It is also the GSE’s second such deal for 2013. Clearly these offerings, first introduced in 2011, are no longer in the “experimental” phase for Freddie Mac.
That said, demand for these loans is not high, at least not compared with the ten-year transactions and as a result it is unclear when the GSE will make another such offering, according to Mitch Resnick, vice president of Freddie Mac Multifamily.
“We are just not producing a lot of seven-year loans at this point, and that is a function of what borrowers are looking for – namely, ten-year loans,” he tells GlobeSt.com. Resnick also noted that these K-Certificates are getting a bit larger in size than they have been historically. The first seven-year K-deal was about $450 million. “As the market matures we are trying to grow the transaction so we can move more risk off our balance sheet,” he explains.
The K-Certificates are backed by 74 recently-originated multifamily mortgages and are guaranteed by Freddie Mac. They include two senior principal and interest classes, a senior interest only class and a junior interest only class.
This latest transaction will be offered to the market by a syndicate of dealers led by Merrill Lynch, Pierce, Fenner & Smith Inc. and J. P. Morgan Securities LLC as co-lead managers and joint bookrunners. Credit Suisse Securities (USA) LLC, Jefferies LLC, Morgan Stanley & Co. LLC and RBS Securities Inc. will serve as co-managers.