FDIC Closes On Sale Of $1.8B Of Notes Backed By MBS

Posted by Orb Staff on March 15, 2010 No Comments
Categories : Residential Mortgage

The Federal Deposit Insurance Corp. (FDIC) has closed on a sale of notes backed by residential mortgage-backed securities (RMBS) from seven failed bank receiverships. The sale was conducted through a private placement priced and allocated on March 5.

The transaction was met with robust investor demand, the FDIC says, with over 70 investors participating across fixed- and floating-rate series. The investors included institutional buyers such as banks, investment funds, insurance funds and pension funds.

The $1.81 billion of notes is backed by 103 non-agency RMBS. The aggregate unpaid balance of the 103 securities was approximately $3.6 billion at the time of the sale. The FDIC retained an equity interest in each series.

The transaction features two series of senior notes, each backed by a separate pool of RMBS. The larger series of approximately $1.3 billion is based on option adjustable-rate mortgages and has a floating rate tied to the one-month LIBOR. The smaller series of $480 million is based mostly on fixed-rate RMBS and pays a fixed rate. Both series were priced at rates comparable to Ginnie Mae-collateralized mortgage obligations, the regulator says.

The notes carry an FDIC guarantee, and the $1.8 billion in proceeds will go to the seven failed bank receiverships and eventually be used to pay creditors, including the FDIC's Deposit Insurance Fund.

Barclays Capital served as the sole bookrunner, structuring agent and financial advisor to the FDIC on the sale. This offering marks the first issuance of notes by the FDIC since the early 1990s and the first issuance by the FDIC of FDIC-guaranteed debt backed by the full faith and credit of the U.S..

SOURCE: Federal Deposit Insurance Corp.

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