Freddie Mac Plans $630 Million Sale of Risk-Sharing Securities

Freddie Mac, the government-controlled mortgage-finance company, is planning its second sale of notes tied to the risk of homeowner defaults.

The deal will include $245 million of securities that Fitch Ratings plans to assign BBB- rankings, the credit grader said today in a presale report. A riskier $385 million portion will be unrated. Both have floating rates and mature in 10 years.

U.S. regulators see sales of the debt by McLean, Virginia-based Freddie Mac (FMCC) and competitor Fannie Mae (FNMA) as a way to reduce the roles of the two taxpayer-backed companies and assess whether they are charging enough to guarantee their traditional mortgage bonds. The latest transaction will be tied to $35.3 billion of loans originated in the fourth quarter of 2012 and this year’s first quarter that have already been packaged into other Freddie Mac securities, according to Fitch.

The risk-sharing deals also resemble provisions in legislation introduced this year that would overhaul the $9.3 trillion U.S. mortgage-finance system. The bill, by Senators Bob Corker, a Republican from Tennessee and Democrat Mark Warner of Virginia, was praised by President Barack Obama.

Freddie Mac sold $500 million of similar debt in July and Fannie Mae completed its inaugural, $600 million deal this month. Relative yields on the bonds have since declined, according to Credit Suisse Group AG analysts.

Patti Boerger, a Freddie Mac spokeswoman, declined to comment.

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

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net