YTD, Freddie Mac's K-deal Volume Surpasses All of 2012

MCLEAN, VA-Last week Freddie Mac reached a milestone for its K Certificates: it surpassed its K-deal volume for all of 2012 with its 18th offering for the year.

The GSE priced a new offering of Structured Pass-Through Certificates, or its multifamily mortgage-backed securities. Some $1.3 billion of K Certificates is expected to settle on or about November 21, 2013.

The K-deal is backed by 79 recently-originated multifamily mortgages. There are two senior principal and interest classes, one senior interest only class and one junior interest only class with each of the three senior classes expected to receive ratings of "AAA" from Fitch Ratings and "AAA" from Morningstar Credit Ratings.

Wells Fargo Securities, LLC and Credit Suisse Securities (USA) LLC are the co-lead managers and joint bookrunners. Co-Managers are Barclays Capital Inc., Citigroup Global Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Morgan Stanley & Co. LLC.

With this issuance, Freddie Mac has done 18 K-deals backed by $26.5 billion in collateral for 2013. This year the GSE also posted its 50th offering of K-deals since the program's launch in 2009—for a grand total of more than $60 billion at that point in time.

K-deals may be Freddie Mac's bread and butter, at least for the multifamily side of the house, but the GSE has been experimenting with other forms of securitization as well. Last month, for example, it launched its first multifamily bulk loan transaction, selling a portfolio of seasoned assets that had been residing on its balance sheet since before it entered conservatorship. The winning bidder was an affiliate of Colony Capital.

The GSE has also sold floating rate deals and mezz classes cut off at the 10% subordination level.

Freddie Mac, along with Fannie Mae, is nearing another benchmark: it will soon be whole with taxpayers. Freddie Mac just reported a third-quarter profit of $30.5 billion and plans to return $30.4 billion to the Treasury.