“This debtrnissuance is an important step forward in reducing our exposure tornresidential credit risk by transferring a portion of it to privaternsector investors,” said Freddie Mac CEO Donald H. Layton. “Ourrnintent is to create a product that will be well-received by investorsrnand can become repeatable and scalable over time.”</p

The large andrnhighly-diversified pool behind the debt notes may provide more stablernand predictable performance, the company said, and in addition to thernsize of the pool – most industry securities that transferrncredit-risk are based on pools that are usually smaller than 1,000rnloans – the STACR notes don’t impact the To Be Announced (TBA)rnmarket. They also limit investor uncertainty by utilizing arnpre-defined calculated severity feature. </p

Response to thernoffering caused its size to be raised to $500 million from the $400rnmillion originally planed. Investors participating in the offeringrninclude mutual funds, hedge funds, REITS, pension funds, banks,rninsurance companies, and credit unions. </p

Freddie Mac holdsrnthe senior and first loss risk in the pool and retains control ofrnservicing and loss mitigation practices, but by placing the STACRrndebt with investors the company reduces its exposure to unexpectedrnlosses. Credit Suisse and Barclays Capital were co-lead managers inrnbringing the issue, designated STACR Debt Notes, Series 2013-DN1, tornmarket. </p

Pricing for thernM-1 tranche was one-month LIBOR plus a spread of 340 basis points.rnPricing for the M-2 tranche was one month LIBOR plus a spread of 715rnbasis points. The notes were priced Tuesday and are scheduled tornsettle on July 26.</p

EdwardrnJ. DeMarco, Acting Director of the Federal Housing Finance Agencyrn(FHFA) said his agency was pleased with Freddie Mac’s near completionrnof its first risk sharing transaction and called it a key step in thernprocess of attracting private capital back into the housing financernmarket. “One of the goals of our Scorecard and Strategic Plan forrnEnterprise Conservatorships is to gradually contract Fannie Mae andrnFreddie Mac’s dominant presence in the marketplace. This transactionrnis a step towards that goal. </p