FDIC Prices First Note Offering

The Federal Deposit Insurance Corp., in an effort to liquidate residential and construction loans from failed banks, has priced two note offerings totaling $1.8 billion to "robust market demand," according to a source familiar with the transaction. Existence of the deals was revealed earlier in the week but the transactions had not yet closed. This is the first in a series of three deals - all private placements - totaling roughly $4 billion. The notes carry a 100% FDIC guarantee. Barclays Capital was the sole book runner on the $1.8 billion offering. It was divided into a $1.33 billion floating-rate transaction and a $480 million fixed-rate deal. Asset Securitization Report, a sister publication to National Mortgage News, said the floating-rate portion priced at 55 basis points over one-month LIBOR, which is 10 points tighter than the initial price guidance of 65 basis points over one-month LIBOR. Meanwhile, the fixed-rate portion priced at 85 basis points over i-swaps, or 5 to 10 points tighter than the initial price guidance of 90 to 95 basis points over i-swaps. The fixed-rate portion priced at a slight discount at 99.61019 with a coupon of 3.25% and a yield of 3.367%. One source said the FDIC went the private route because it saved time. If these deals were not privately placed it "could take too long to get the public disclosure together, and on a greater level, to get Securities and Exchange Commission approval. But then again, does the FDIC need SEC approval to do a public offering?" asked the source.