Freddie Mac to price five-year Reference Note; agency spreads tighten

By Lisa Kerner

Charlotte, N.C., April 21 - Freddie Mac announced it will price a new five-year Reference Note security on Wednesday at benchmark size.

One source heard talk of a spread of 72 basis points over Treasuries, but no word on the exact size of the note.

He did hear that one co-manager "blew through their bonds very quickly" and that apparently the issue "is going very well."

Freddie Mac said the Reference Notes will be offered via a syndicate of dealers headed by Deutsche Bank Securities, Inc., Goldman Sachs Group, and Morgan Stanley.

Also on Tuesday, Freddie Mac sold via an internet-based auction a $1 billion reopening of its 1.625% two-year Reference Notes security that matures on April 26, 2011.

According to Freddie Mac, the stop yield for the issue was 1.338%, priced at 100.566793 or approximately 45 basis points more than two-year Treasuries.

The bid-to-cover ratio was 3.42 to 1.

Freddie Mac said following the reopening, the outstanding size of the 1.625% two-year Reference Notes security will be $6 billion.

Agency spreads on Tuesday were tighter, said two traders. The short end was "tighter by 1 to 2 basis points" while the five-year and out sectors were "tighter by 2 to 4 bps," one trader said.

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