By Paul A. Harris
St. Louis, Nov. 29 - Freddie Mac raised $6 billion via the sale of its fixed-to-floating rate non-convertible non-cumulative perpetual preferred stock (expected ratings Aa3/AA-/A+) on Thursday, according to a press release.
The shares, which priced at $25.00, will pay an 8 3/8% fixed-rated dividend for the first five years. Thereafter the dividend will float at the greater of three-month Libor plus 416 basis points or 7 7/8%.
Lehman Brothers Inc. and Goldman Sachs & Co. ran the books.
McLean, Va.-based Freddie Mac will use the proceeds for regulatory capital purposes for use in managing the Office of Federal Housing Enterprise Oversight's 30% mandatory target capital surplus directive. The company expects to deploy proceeds for the purchase of residential mortgages or mortgage-related securities, for financing growth in its mortgage guarantee business and for other corporate purposes consistent with evolving business and market conditions.
"We are very pleased by the strong investor interest and demand shown in our preferred stock offering," said Richard Syron, Freddie Mac chairman and chief executive officer, in a news release.
"Our offering was substantially over-subscribed. We are raising capital in this offering to enable Freddie Mac to continue fulfilling our important housing mission through the current market environment, and better position us to effectively manage the company going forward."
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing.
| Issuer: | Freddie Mac
|
| Amount: | $6 billion
|
| Maturity: | Perpetual
|
| Security description: | Fixed-to-floating rate non-convertible non-cumulative perpetual preferred stock
|
| Bookrunners: | Lehman Brothers Inc. and Goldman, Sachs & Co.
|
| Dividend: | 8 3/8% until Dec. 31, 2012, thereafter at the greater of three-month Libor plus 416 bps or 7 7/8%
|
| Price: | $25.00 per share
|
| Call protection: | Callable on Dec. 31, 2012 at par plus the accrued dividend
|
| Trade date: | Nov. 29
|
| Settlement date: | Dec. 4
|
| Expected ratings: | Moody's: Aa3
|
| Standard & Poor's: AA-
|
| Fitch: A+
|
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