The Federal Deposit Insurance Corp. (FDIC) has closed on a sale of securities as part of a securitization backed by approximately $394.3 million of performing commercial and multifamily mortgages from 13 failed banks. The pilot transaction is the first of its kind for the FDIC since the beginning of the financial crisis.
The FDIC uses several strategies, including securitization, to sell assets from failed banks. This transaction is expected to provide more than $353.2 million in gross proceeds to the Deposit Insurance Fund.
The investors for the Class A senior certificates include a variety of institutions, including banks, insurance companies and money managers. The Class B mezzanine and Class C subordinate classes were purchased by an affiliate of LNR Partners LLC.
The pilot transaction consisted of three classes of securities. Senior certificates of $315.4 million represented 80% of the capital structure and will be guaranteed by the FDIC in its corporate capacity. These senior certificates sold at a fixed-rate coupon of 1.84% and are expected to have an average life of 2.6 years.
Approximately $39.4 million of mezzanine certificates represented 10% of the capital structure. These certificates sold at a fixed-rate coupon of 5% and are expected to have an average life of 6.5 years.
The subordinate class also totaled $39.4 million and represented the most junior 10% of the capital structure. These certificates sold at a fixed-rate coupon of 5% and are expected to have an average life of 7.1 years.
The mezzanine and subordinate certificates are not guaranteed by the FDIC.
