UPDATE: Freddie Mac Announces $30 Billion Tender Of Near-Term Debt

(Updates with details on transaction from Freddie.)

 
   DOW JONES NEWSWIRES 
 

Freddie Mac (FRE) on Monday announced plans to repurchase up to $30 billion of debt securities coming due in the next 15 months as the mortgage giant continues to deal with surging loan losses.

The debt currently has $69.9 billion in principal outstanding. The tender offer expires at 5 p.m. EDT Friday.

Freddie last month reported a loss of $9.85 billion for the first quarter amid mounting mortgage-default costs, and said it will need another $6.1 billion of capital from the U.S. Treasury Department.

The company is undertaking the buyback as a way of managing its liabilities, said Mohit Sudhakar, Freddie's senior director of debt portfolio management.

Freddie wants to retire a portion of its short, floating rate securities that mature over the next 12 to 15 months and issue longer maturing debt with cheaper risk premiums paid to investors, he said.

The company will use a variety of funding sources to finance the tender offer including discount notes and longer maturing debt, Sudhakar said.

Federal regulators seized control of Freddie and its larger peer Fannie Mae (FNM), the two main providers of funds for U.S. home mortgages, in September as growing losses ate through their thin layers of capital. The Treasury has agreed to provide as much as $200 billion of capital apiece to Fannie and Freddie by purchasing preferred stock paying 10% dividends. With its latest request, that would bring Freddie's total to about $51 billion.

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; [e-mail]

(Prabha Natarajan contributed to this report.)