Freddie Mac STACR Notes Tender Offer - FAQs
STACR tender offer transactions, focusing on the repurchase of certain STACR notes.
Q1: Why is Freddie Mac launching a STACR tender offer?
A: The purpose of a STACR tender offer is to reduce the level of Freddie Mac indebtedness under certain outstanding STACR notes. Freddie Mac will effectively manage costs related to credit risk transfer by repurchasing STACR notes that have substantially deleveraged (due to decreases in credit risk of related reference pools and increases in credit enhancements to STACR securities) and that no longer provide Freddie Mac with an economically sensible means of transferring credit risk.
Q2: What is Freddie Mac’s plan after repurchasing STACR notes?
A: Following a tender offer transaction, Freddie Mac will retire and cancel any notes that are tendered and accepted in the tender offer.
Q3: What benefits will investors receive from participating in a tender offer? What’s the impact on STACR’s secondary market trading going forward?
A: A STACR tender offer provides investors an opportunity to sell certain outstanding STACR notes at an announced tender price.
To the extent that notes are tendered and accepted in a tender offer, the outstanding notes available for trading will likely become limited. A bid for a security with a smaller outstanding principal amount available for trading (a smaller “float”) may be lower than a bid for a comparable security with a greater float. Therefore, the market price for and liquidity of notes not tendered may be adversely affected to the extent that the principal amount of the notes purchased pursuant to a tender offer reduces the float. The reduced float may also tend to make the trading price more volatile.
Q4: Will there be an impact to new STACR issuance or pricing?
A: A tender offer by Freddie Mac may or may not have an impact on pricing of new STACR securities, as it would reduce “float” of outstanding STACR notes that are not tendered and investors may or may not be able to re-allocate investments towards new issuances. In addition, a tender offer may impact secondary markets, which may impact pricing for new issuance.
Q5: Is Freddie Mac looking to significantly change its CRT strategy?
A: Freddie Mac remains committed to the CRT market. The execution of a tender offer should not be considered a signal to Freddie Mac’s future CRT issuance. Please visit crt.FreddieMac.com for the latest issuance calendar.
Q6: How does Freddie Mac determine which STACR notes to include in a tender offer?
A: STACR notes included in a tender offer generally do not provide any meaningful capital relief to Freddie Mac. Freddie Mac considers, among other things, the macroeconomic environment, overall CRT market condition and Freddie Mac risk management objectives.
Q7: For holders who choose not to participate in a tender offer or notes that are not part of a tender offer, will payment on the notes or their credit enhancements be impacted going forward after the tender offer?
A: The outstanding balance of a tendered note will continue to be part of the related reference tranche. Notes that are not tendered will remain outstanding. The payments to the outstanding notes and their credit enhancements (including not tendered, related MAC notes or related original notes not identified on the front cover of the Offer to Purchase and other notes using the same reference pool) will not be impacted by the tender offer.
Q8: Can holders tender MAC notes related to the eligible STACR notes in a tender offer?
A: Only the STACR notes identified on the front cover of the Offer to Purchase are eligible for tender. Holders of related MAC notes or related original notes not identified on the front cover of the Offer to Purchase would not be eligible to participate in the tender offer unless they first exchange their MAC notes or related original notes not identified on the front cover of the Offer to Purchase for eligible STACR notes and submit those eligible STACR notes pursuant to the terms of the tender offer.
Q9: Where can I find more details about a STACR tender offer?
A: The Offer to Purchase can be found at the bottom of this webpage.
Disclaimer
These FAQs contain forward-looking statements within the meaning of Section 27A of the Securities Act. These statements involve known and unknown risks and uncertainties, some of which are beyond our control. These statements are not historical facts but rather represent our expectations based on current information, plans, judgments, assumptions, estimates and projections. Actual results or performance may differ from those described in or implied by such forward-looking statements due to various risks, uncertainties and other factors including the following: general economic and business conditions, competition, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, customer preference and various other matters. These forward-looking statements are made only as of February 1, 2022. We undertake no obligation to update any forward-looking statements we make to reflect events or circumstances occurring after February 1, 2022.
Freddie Mac STACR Notes Tender Offer Deal Documents
STACR 2022-TO1
STACR 2022-TO1 Offer to PurchaseThis links to a pdf fileThis link opens a new window [PDF]
STACR 2022-TO1 Press Release
STACR 2022-TO1 Bond Factor InformationThis links to a pdf fileThis link opens a new window [PDF]
STACR 2021-TO1
STACR 2021-TO1 Offer to PurchaseThis links to a pdf fileThis link opens a new window [PDF]
STACR 2021-TO1 Supplement No.1 to Offer to PurchaseThis links to a pdf fileThis link opens a new window [PDF]
STACR 2021-TO1 Supplement No.2 to Offer to PurchaseThis links to a pdf fileThis link opens a new window [PDF]
STACR 2021-TO1 Press Release
STACR 2021-TO1 Early Tender Period Results Press Release
STACR 2021-TO1 Letter of TransmittalThis links to a pdf fileThis link opens a new window [PDF]
