Rate Volatility Challenges DUS REMIC Pricing but Demand Persists for Some Bonds

Recent rate volatility created some challenges in pricing Fannie Mae’s recent $1.02 billion DUS REMIC last week but investor demand remained stronger for shorter maturities and support bonds, the agency indicated in a report on the deal today.

“We will continue to structure deals that provide investment opportunities across the curve and, in turn stronger liquidity for our borrowers,” said Josh Seiff, Fannie Mae director of multifamily capital markets, added in a press release.

Barclays was the lead manager on the DUS real estate mortgage investment conduit deal, FNA 2013-M9. Co-managers were Deutsche Bank and Jefferies. The bonds are backed by two groups of collateral.

Group 1 has an unpaid principal balance of $432,139,343 and contains 74 Fannie Mae delegated underwriting and servicing mortgage-backed securities with top geographic concentrations in California (22.6%), New York (9%), and Pennsylvania (7.8%). Group 1 also has a debt service coverage ratio of 1.83x and a weighted average loan-to-value ratio of 60.5%.

The second group of collateral has a $590,000,199 unpaid principal balance, contains 92 Fannie DUS MBS, with top geographic concentrations in New York (14%), Texas (11%) and North Carolina (10.5%). Group 2 also has a DSCR of 1.88x and a weighted average LTV of 68.8%.

The DUS REMIC is slated to settle on June 28.