Also Elects Not to Reopen Any Outstanding Euro Reference Notes in November
Freddie Mac today announced that it will periodically repurchase its Euro Reference Notes as the continued development of this asset class merits the implementation of a full-scale liability management strategy. Separately, the company announced that it has elected not to reopen any Euro Reference Notes during the week of November 11, 2002.
"Periodic repurchases, as a duration management tool, will allow Freddie Mac to further strengthen its asset / liability management strategies," said Jerome Lienhard, Senior Vice President, global debt funding.
The Euro Reference Notes repurchase operations will complement Freddie Mac's U.S. dollar Reference Notes(R) periodic repurchase operations. Since June 2001, Freddie Mac has repurchased $14.5 billion of off-the-run Reference Notes in 14 operations. These have enhanced and focused liquidity on new issues, allowing Freddie Mac to maintain its calendar issuance despite changing funding needs.
In addition to liquidity benefits, the Euro Reference Notes periodic repurchase operations are expected to enhance price transparency of this asset class. Freddie Mac expects to conduct at least quarterly repurchase operations using its Internet-based platform and will provide overnight advance notice of repurchase activity. Results -- including the amounts of each security the company has repurchased -- will be posted within 15 minutes after the offering submission deadline. Any departure from this timetable should be for exceptional circumstances only.
"We designed the Euro Reference Notes repurchase operations as a liability management tool that serves the mutual interests of our investors and Freddie Mac," said Lienhard. "We expect this program to result in enhanced liquidity, transparency and relative value."
Freddie Mac is committed to maintaining liquidity in Euro Reference Notes. Freddie Mac expects that all issues of Euro Reference Notes will remain quoted on the MTS trading platform following repurchase operations although market making commitments are not enforced by MTS when issue sizes fall below euro 5 billion.
Freddie Mac will consider multiple offerings per issue through the dealer group. Dealers invited to participate in the Euro Reference Notes repurchases are ABN AMRO, Banca IMI Securities, Barclays Capital, Inc., BNP Paribas, CDC IXIS, Credit Agricole Indo-suez, Credit Suisse First Boston, Deutsche Bank, Dresdner Kleinwort Wasserstein, Goldman Sachs Group, HSBC-CCF, ING Barings, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Schroeder Salomon Smith Barney, Inc., Societe Generale and UBS Warburg.
This announcement is neither an offer to sell nor a solicitation of offers to buy any of these securities. Any such offering will be made only by applicable offering materials. Grant Street Group, parent of MuniAuction, Pittsburgh, PA, provides the services and technology relating to the repurchase operations.
For more detail on the program, please refer to the below Program Description.
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage passthrough securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America. Freddie Mac is the winner of the Euromoney Best Agency Borrower award for 2002. For additional information about Freddie Mac, please see the web site at http://www.freddiemac.com/ .
Grant Street Group is the parent of MuniAuction, the country1s first website for auctions of fixed income securities. Grant Street Group creates customized web sites for auctions and other transactions of fixed-income and equity securities that serve the particular needs of issuers, dealers, institutional investors, treasurers and global financial institutions. In addition to web site development, the company provides on-going auction/transaction hosting and administrative support services. Since November 1997, Grant Street Group has hosted over 5,000 Internet auctions of fixed income securities totaling more than $3.1 trillion. Grant Street Group has 20 employees and is headquartered in Pittsburgh, Pennsylvania. More information on Grant Street Group is available at http://www.grantstreet.com/ , or by calling 412-391-5555.
Freddie Mac Euro Reference Notes(R) Periodic Repurchase Operations Program Features An overnight public notice will be provided via the Freddie Mac website, designated dealers and major newswires. In rare circumstances, less advance Public Notice notice (at least one hour) may be given. Advance notice will include target issues, maximum repurchase amount, offering submission deadline and settlement date. Freddie Mac expects to provide an automated Response Time to confirmation of trade to participating dealers as Dealers soon as possible following completion of the repurchase operation. Public Results Amount repurchased by issue and overall offer-to- Announcement cover ratio will be posted within 15 minutes after the offering submission deadline. Each Euro Reference Notes issue will not be eligible for repurchase during the first three months following issuance or re-opening (tap) of that Issue Eligibility issue. Euro Reference Notes of similar maturities and Lockout Period will not be repurchased during the period beginning one week prior to a scheduled issuance window through the settlement date. Existing Euro Reference Notes will be deemed to have a similar maturity if their maturity differs by 18 months or less from the maturity of the Euro Reference Notes scheduled to be issued. Execution Dealers submit offers, expressed in yield in Methodology increments of one-tenth of a basis point, via the Internet. Offerings Per Issue Multiple offerings will be permitted for each issue. After the offering submission deadline, Freddie Mac will consider all offerings together and will order Award Process the offerings from the lowest to the highest offering price. Offerings may be accepted in full, accepted in part or rejected. Each Euro Reference Notes repurchase amount will not Maximum Repurchase exceed 20% of the then-outstanding amount of an Amount and Minimum issue of eligible Euro Reference Notes (after giving Outstanding Issue effect to any previous repurchases). The minimum Size outstanding amount of each Euro Reference Notes issue following a repurchase will be euro 3 billion. Frequency Freddie Mac expects to conduct at least quarterly Euro Reference Notes buyback operations. ABN Amro, Banca IMI Securities, Barclays Capital, Inc, BNP Paribas, CDC IXIS, Credit Agricole Indo- suez, Credit Suisse First Boston, Deutsche Bank, Dealer Group Dresdner Kleinwort Wasserstein, Goldman Sachs Group, HSBC-CCF, ING Barings, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Schroeder Salomon Smith Barney, Societe Generale and UBS Warburg. Settlement All trades will be settled at T+3.
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CONTACT: Gisela Vallandigham, +1-703-903-2558, or Heather Sieber, +1-703-903-2330, both of Freddie Mac
Web site: http://www.freddiemac.com/ http://www.grantstreet.com/
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