McLEAN, VA–Freddie Mac has created a new offering for both institutional and private investors called the KT certificate. KT01 has its own shelf independent of the K-Shelf, even though it sells off multifamily mortgage loans that are waiting for securitization in the GSE's K certificates.
Basically what Freddie Mac has done is create a facility in which the loans that are meant to be securitized in the K Certificate are placed. Prior to this, Freddie Mac would purchase a loan and it would sit on the books for five to seven months and then it would be sold into a K deal.
Freddie Mac wanted a way to transfer the risk off of its books during this interim period, while also giving private investors a crack at these securities while they were held in the holding facility, so to speak. The KT certificates don't siphon off volume from the K deals — they will move out of the facility and into the K deal on a regularly revolving basis.
The senior securities will be offered broadly while the B and C notes will be privately placed.
Series 2017-KT01, the first offering of $1 billion in KT Certificates, has just been priced and is expected to settle on Feb. 16, 2017.
Freddie Mac will guarantee the Class A certificates but not the Class B, C or D certificates. Freddie Mac expects to purchase the Class D certificates and a portion of the Class A certificates.
For its first deal, the senior floating-rate certificates priced at one month Libor plus 32 basis points.
McLEAN, VA–Freddie Mac has created a new offering for both institutional and private investors called the KT certificate. KT01 has its own shelf independent of the K-Shelf, even though it sells off multifamily mortgage loans that are waiting for securitization in the GSE's K certificates.
Basically what
The senior securities will be offered broadly while the B and C notes will be privately placed.
Series 2017-KT01, the first offering of $1 billion in KT Certificates, has just been priced and is expected to settle on Feb. 16, 2017.
For its first deal, the senior floating-rate certificates priced at one month Libor plus 32 basis points.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
