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Freddie Mac offering multifamily aggregation risk transfer certificates

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Freddie Mac offering multifamily aggregation risk transfer certificates

Freddie Mac is offering multifamily aggregation risk transfer certificates, series 2017-KT01, which will be backed by multifamily mortgage loans awaiting sale into K-series securitizations.

This is Freddie Mac's first offering of these certificates, which are designed to transfer to certain investors part of the credit risk associated with eligible multifamily mortgage loans prior to their sale into K-series securitizations. The $1 billion in KT certificates is expected to settle on or about Feb. 16.

On the settlement date, Freddie Mac will sell to the FMPRE 2017-KT01 Multifamily Aggregation Risk Transfer Trust about $1 billion in eligible mortgage loans. During a 32-month revolving period, Freddie Mac will buy mortgage loans from the trust for sale into K-series securitizations and replace them with additional eligible mortgage loans.

The trust will issue class A, B, C and D certificates. Freddie Mac will guarantee timely payment of interest, reimbursement of realized losses and the ultimate repayment of principal on the class A certificates, but not the others. Freddie Mac expects to buy the class D certificates and part of the class A certificates.

Barclays Capital Inc. and Wells Fargo Securities LLC are acting as lead managers and book runners. Academy Securities Inc. and J.P. Morgan Securities LLC are co-managers for the class A certificates.