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FREDDIE MAC LAUNCHES REFERENCE REMICSM SECURITIES
Product Innovation Provides More Predictable, Transparent Investment Options for the Mortgage-Backed Securities Market
McLean, VA – Freddie Mac (NYSE: FRE) today announced the launch of Reference REMICSM securities, structured mortgage-backed securities investments for global investors. The inaugural Reference REMIC is expected to settle in April 2005, and will be distributed by a multi-tiered dealer syndicate.
"Freddie Mac is delighted to introduce Reference REMIC securities," said Patricia Cook, Freddie Mac executive vice president, investments and capital markets. "These securities are designed to further our housing mission by broadening the investor base for our mortgage-backed securities. Reference REMIC securities feature the hallmarks of Freddie Mac’s Reference suite of products, including liquidity, transparency and calendar-based predictability, while utilizing our retained portfolio to create shorter stated maturities and other attributes that meet the needs of the global investment community."
Freddie Mac’s Reference REMIC securities will be offered on a quarterly basis, and issuance will be set on a calendar for 2005. The minimum issuance size of each Guaranteed Maturity Class (GMC) tranche will be $1 billion, with the initial security expected to be at least $2 billion. Reference REMIC securities will be distributed via a multi-tiered syndicate structure with daily closing prices posted by the lead managers to TradeWeb® and the Bloomberg TerminalTM. Reference REMIC securities will be the first-ever REMIC securities available on TradeWeb, with electronic trading available in May.
"Just as innovations in the mortgage origination process create opportunities for more Americans to own their homes, the structured product market provides an opportunity to create products that satisfy the needs of a broad range of investors," said Jerome Lienhard, Freddie Mac treasurer and senior vice president, funding and investor relations. "The Reference REMIC security provides many of the features that we know are vitally important to a broad range of investors. At the product’s core are attributes that promote liquid, transparent and more predictable securities."
Innovative Product Features
Key product features include:
More liquidity than traditional structured securities – minimum single GMC tranche size for the Reference REMIC security will be $1 billion. Reference REMIC securities will be issued through multiple offerings from each tranche, and primary distribution will be through a multi-tiered syndicate.
Transparent structure and pricing – Reference REMIC security pricing will be transparent, with Thomson TradeWeb displaying intra-day indications and daily closing prices from the lead managers. Thomson TradeWeb will also offer electronic trading of Reference REMIC securities, starting in May. Following the successful model of Freddie Mac’s suite of Reference securities products, the Reference REMIC security will be issued according to a quarterly issuance calendar of intended offering months. Reference REMIC securities will be fully backed by U.S. home mortgages through Freddie Mac’s Gold PCs, and the PCs underlying the offered GMC are disclosed prior to pricing.
More predictable securities – Freddie Mac Reference REMIC securities will feature a stated final maturity. Freddie Mac will issue at least one – and no more than two – Reference REMIC securities each quarter.
Freddie Mac securities are obligations of Freddie Mac only. The securities, including any interest or return of discount on the securities, are not guaranteed by and are not debts or obligations of the United States or any federal agency or instrumentality other than Freddie Mac.
This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac’s information statement and related supplements.
Freddie Mac’s press releases sometimes contain forward-looking statements pertaining to management’s current expectations as to our future business plans, results of operations and/or financial condition. Management’s expectations for the company’s future necessarily involve a number of assumptions and estimates, and various factors could cause actual results to differ materially from these expectations. These assumptions and factors are discussed in our Information Statement dated September 24, 2004 and supplements thereto, which are available on the Investor Relations page of our website at www.FreddieMac.com/investors.
Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers in America.
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