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Summary: Freddie Mac (Series ML-11 Class A-US); Custodial Receipts

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Table Of Contents: S&P Global Ratings Credit Rating Models


Summary: Freddie Mac (Series ML-11 Class A-US); Custodial Receipts

Rationale

S&P Global Ratings assigned its 'AA+ (sf)' rating to Freddie Mac's class A-US series ML-11 multifamily certificates.

The rating reflects our view of the credit enhancement, in the form of a Freddie Mac guarantee for the class A-US certificates. The rating also reflects our opinion of the likelihood class A-US certificateholders will receive full and timely interest and principal payments when due.

However, the rating does not reflect our opinion of the likelihood certificateholders will receive full and timely payment of any prepayment premiums or yield-maintenance charges.

As noted in our analysis on Freddie Mac, published Apr. 1, 2021, on RatingsDirect, the rating on Freddie Mac's senior unsecured debt is the same as our sovereign rating on the U.S. This reflects the almost certain likelihood, in our assessment, of the U.S. government providing extraordinary support to Freddie Mac, if needed, coupled with the government's ongoing support, including the senior-preferred-stock-purchase agreement with the U.S. Treasury and Federal Housing Finance Agency's oversight and operational involvement as Freddie Mac's regulator and conservator.

Furthermore, we continue to expect that any reforms implemented, with or without Congress, will not reduce, at least during our two-year outlook period, the likelihood that the current senior and subordinated obligations of Fannie Mae and Freddie Mac will be met. That expectation underpins our 'AA+/A-1+' ratings on the senior debt, of the housing government-sponsored enterprises, which continue to have a stable outlook. (For more information, please see "Fannie Mae, Freddie Mac Better Prepared For Economic Shocks By New Banklike Liquidity Rules," published Aug. 5, 2020.)

Structural Review

On the closing date, Freddie Mac, as depositor, transfers a pool of underlying tax-exempt loans (TELs) into the FRETE 2021-ML11 Trust, a New York common law trust for the benefit of certificateholders.

Freddie Mac guarantees timely payments for class A-US certificateholders on each distribution date. Freddie Mac will make any payments pursuant to the guarantee from its own funds. Freddie Mac's standby credit enhancement will terminate upon the series' final distribution, which is the date certificateholders receive final payment. Credit enhancement, however, will remain in effect, with Freddie Mac making payments of any recaptured amount due to certificateholders because of an act of trust bankruptcy.

Each certificate class bears interest that accrues based on a 30/360 basis. The class A-US certificates are subject to a clean-up call.

Rating Sensitivity

In our view, based on the certificates' structures, changes to the rating on the certificates could result from, among other events, changes to the rating on Freddie Mac or amendments to transaction terms.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column.

Primary Credit Analyst:Nicholas Breeding, New York (303) 721-4362;
nicholas.breeding@spglobal.com
Secondary Contact:Courtney Reopelle, Centennial 303 721 4513;
courtney.reopelle@spglobal.com

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