Freddie Mac Said to Plan $1 Billion of Risk-Sharing Securities

Freddie Mac (FMCC), the government-controlled mortgage-finance company, is planning to sell $1 billion of securities tied to the risk of homeowner defaults, almost matching the amount issued since the deals began last year, according to a person with knowledge of the transaction.

The sale will include a portion with more protection against the underlying loans souring than offered in Freddie Mac’s two deals last year, said the person, who asked not be named because the information was private. The company sold $1.1 billion of bonds in the 2013 transactions, which began in July.

Issuance of risk-sharing securities by Freddie Mac and rival Fannie Mae is accelerating as policy makers seek to reduce their role in the mortgage market and assess whether they’re charging enough to guarantee their traditional home-loan bonds.

Patti Boerger, a spokeswoman for Mclean, Virginia-based Freddie Mac, declined to comment.

Credit Suisse Group AG (CSGN) separately issued bonds backed by $287.4 million of prime mortgages without government backing, according to a report today by rating company DBRS Inc. The deal may have been the first non-agency transaction since November. Those offerings have slowed as banks seek to retain loans and investors demand wider relative yields on the safest securities.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net

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