Weekly Real Estate News
Summary
Fannie Mae launched fixed-price tender offers for eight classes of Connecticut Avenue Securities notes from 2022 and 2023 transactions. The offers expire Oct. 2 unless extended or terminated earlier.
Fannie Mae has opened fixed-price cash tender offers for eight classes of Connecticut Avenue Securities notes, continuing its active management of credit-risk-transfer securities tied to the company’s single-family mortgage book.
The government-sponsored enterprise announced the offers Monday. They cover specified classes from CAS transactions issued in 2022 and 2023.
The offers are scheduled to expire at 5 p.m. New York City time on Friday, Oct. 2, unless Fannie Mae extends or terminates them earlier. Notes may be withdrawn at or before the deadline under the procedures in the offer documents.
Eight CAS classes are included
The tender covers eight classes across six CAS transactions: 2022-R08; 2023-R01; 2023-R02; 2023-R04; 2023-R05; and 2023-R06.
Offer consideration ranges from $1,016.20 to $1,041.40 per $1,000 of original principal amount, depending on the class. Fannie Mae said the tender consideration will incorporate monthly certificate percentages available as of Sept. 25.
Holders whose notes are accepted will also receive accrued and unpaid interest from the last interest-payment date up to, but not including, the settlement date.
Fannie Mae expects settlement on Oct. 6. Notes accepted through the notice-of-guaranteed-delivery process are expected to be purchased Oct. 7, although accrued interest would run only through the Oct. 6 settlement date.
Why CAS matters to housing finance
Connecticut Avenue Securities are part of Fannie Mae’s credit-risk-transfer program. Through CAS transactions, private investors take exposure to a portion of the credit risk associated with reference pools of mortgages guaranteed by Fannie Mae.
The structure is designed to transfer mortgage credit risk away from the enterprise while Fannie Mae continues to guarantee the underlying loans. Tender offers allow the company to repurchase outstanding securities when market conditions and portfolio-management considerations support doing so.
Monday’s announcement is a tender offer, not a completed repurchase. The amount ultimately acquired will depend on how many holders tender notes and whether the conditions in the offer documents are satisfied.
BofA Securities and Citigroup Global Markets are serving as dealer managers. Global Bondholder Services Corp. is the tender and information agent.
The scheduled Oct. 2 expiration means the final amount tendered will not be known until the offer process closes. Fannie Mae’s announcement also cautions that expected settlement dates are forward-looking and are not guaranteed to occur on the stated schedule.
