Freddie Mac Announces First K-Deal of the Year

MCLEAN, VA-Freddie Mac has launched its first Structured Pass-Through Certificate, or K Certificate, deal of the year—a $1 billion offering backed exclusively by multifamily mortgages with a 7-year term. The GSE expects the offering to price this week and settle on or about February 7.

This is the fifth such K-Certificate offering. Last year, Freddie Mac securitized just under $14 billion in the larger program, Mitchell Resnick, vice president, Pricing, Costing and Capital Deployment for Freddie Mac, tells GlobeSt.com. “It has been a very successful program,” he says. “In general, total issuance in agency CMBS has grown substantially in the last few years. We are finding more and more investors looking at the space as an alternative investment area.”

Indeed, one of the K-Certificate program’s claim to fame is that it had a deal in the market the same week Standard & Poor’s downgraded the US credit last year. Nonetheless, the offering executed and closed exactly as expected, Mike McRoberts, Freddie Mac's national head of sales told GlobeSt.com last year. 

Like most GSE multifamily capital programs that prove to be popular with investors, the K-Certificate product will be tweaked this year, Resnick says, although he would not provide specific details. “This year you will see some different types of transactions going forward. We also expect to maintain a regular schedule and also grow our total issuance.” Resnick adds that while the $1 billion-sized offering is not a fixed amount, it is unlikely that it will change. “I think investors are comfortable with that deal size.”