Freddie $1 Billion Commercial Mtge Backed Security To Be Sold In June

Freddie Mac (FRE) is marketing a $1 billion commercial mortgage bond backed by multifamily loans that is due to be sold in the second week of June.

This marks the first time that a commercial mortgage bond is sold with the backing of a government-sponsored enterprise. It would also be the first large commercial mortgage bond deal sold in nearly a year.

The deal is led by Deutsche Bank Securities Inc. and is expected to settle in June.

It is backed by 62 recently originated multifamily mortgages and is guaranteed by Freddie Mac.

This transaction is expected to open up a new way for Freddie to raise liquidity and support the troubled multifamily market. Apartment and condominium complexes have been the most troubled in the real-estate sector.

So far, both Freddie and Fannie Mae (FNM) have held multifamily loans that they purchase on their books without securitizing them. This move is expected to free up Freddie's capital, so that it can invest more in multifamily loans.

"Freddie Mac is responding to difficult conditions in the multifamily housing financing market by finding innovative ways to link affordable rental housing to the capital markets." said Mike May, Freddie Mac's senior vice president of multifamily business.

By offering multifamily loan securitization through this bond, Freddie is providing "critically needed support to the multifamily housing market during these difficult economic times," May said.

-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; [e-mail]