The Federal Deposit Insurance Corp. sold $1.81 billion of debt backed by mortgage securities, as it seeks to raise cash after the worst financial crisis since the Great Depression.
The FDIC sold $1.33 billion of floating-rate notes that yield 55 basis points more than the one-month London interbank offered rate, according to a person familiar with the offering who declined to be identified because the sale was private. Libor was set at 0.23 percent Friday. The agency also sold $480.1 million of fixed-rate notes that yield 3.367 percent, or 85 basis points more than the benchmark swap rate.
The debt, underwritten by Barclays Capital, is guaranteed by the FDIC and backed by mortgage securities from failed banks, the person said. The FDIC, which insures bank deposits, may issue $4 billion of bonds this month, people familiar with the matter said last week. The notes were sold at lower spreads than initially offered amid “a lot of demand,” Jesse Litvak, a mortgage-bond trader at Jefferies & Co. in New York, said.
“Given that the number of failed institutions is rapidly approaching 200, I would expect to see more of these deals get done,” Litvak said, referring to the total since 2007.
