Farmer Mac Closes $318.8 Million Securitization of Agricultural Mortgage-Backed Securities (AMBS)

Rhea-AI Summary

Farmer Mac (NYSE: AGM) has completed a $318.8 million securitization of agricultural mortgage loans, marking its fifth FARM series transaction since 2021. The FARM 2024-2 mortgage pool comprises 446 agricultural mortgage loans, featuring a $294.9 million senior tranche guaranteed by Farmer Mac and a $23.9 million unguaranteed subordinate tranche. The senior tranche is structured into three guaranteed classes (A, A1, and A2) offering different principal repayment cashflows to attract new investors. The transaction demonstrates strong demand from diverse investors and reinforces Farmer Mac's commitment to improving credit accessibility in rural America.

Positive

• Successfully completed $318.8M securitization of agricultural mortgage loans
• Structured offering with three guaranteed classes to attract new investors
• Strong investor demand reported for FARM securitization program
• Portfolio consists of 446 agricultural mortgage loans underwritten to industry-leading standards

Negative

• None.

Insights

Financial Analyst

This $318.8 million agricultural mortgage-backed securitization represents a significant financial transaction that strengthens Farmer Mac's market position. The deal structure, featuring a $294.9 million senior tranche and $23.9 million subordinate tranche, demonstrates sophisticated financial engineering. The introduction of three guaranteed classes (A, A1, A2) with different principal repayment cashflows shows strategic innovation in attracting diverse investors.

The pool of 446 agricultural mortgage loans underwritten to stringent standards indicates strong asset quality. This fifth FARM series transaction since 2021 establishes Farmer Mac as a consistent issuer in the AMBS market, potentially leading to improved liquidity and pricing for future offerings. The participation of major financial institutions as bookrunners adds credibility to the transaction.

Market Research Analyst

The successful completion of this securitization indicates robust demand for agricultural mortgage-backed securities, particularly noteworthy given current market conditions. The diversified investor base and structured approach with multiple tranches suggests growing market maturity for agricultural financial products. This transaction strengthens Farmer Mac's role in providing liquidity to rural credit markets while managing its own balance sheet effectively.

The deal's sophisticated structure and strong investor reception could set a precedent for future agricultural securitizations, potentially expanding this market segment. The involvement of both major and boutique investment banks points to broad market distribution capabilities.

WASHINGTON, Nov. 26, 2024 /PRNewswire/ -- The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A), the nation's secondary market provider that increases the accessibility of financing for American agriculture and rural infrastructure, announced today that it has completed a $318.8 million securitization of agricultural mortgage loans. This is Farmer Mac's fifth transaction in the FARM series since 2021.

"We are very pleased with the execution of our fifth agricultural mortgage-backed securitization (AMBS) transaction, FARM 2024-2, as we returned to the market for a second time in 2024," said President and Chief Executive Officer, Brad Nordholm. "Farmer Mac remains committed to being a frequent issuer and developing a vibrant and liquid AMBS market that is central to our core mission to improve credit accessibility in rural America."

The mortgage pool for FARM Series 2024-2 consists of 446 agricultural mortgage loans with an aggregate outstanding principal balance of approximately $318.8 million. The loans in the pool were underwritten to Farmer Mac's industry-leading standards that focus on repayment capacity through stressed inputs. This deal included a $294.9 million senior tranche guaranteed by Farmer Mac and a $23.9 million unguaranteed subordinate tranche. The senior tranche reflects an enhanced sophistication of the securitization by offering notes in three classes, A, A1, and A2, each of which are guaranteed by Farmer Mac. These three guaranteed classes provide for differing principal repayment cashflows, which provided more investment options and drove new investor demand.

"We are once again thrilled to see such strong demand for our FARM securitization program from a broad range of investors," said Chief Financial Officer and Treasurer, Aparna Ramesh. "The FARM 2024-2 transaction exemplifies the strength and breadth of our platform and the continued strong demand for our attractive portfolio of agricultural mortgage loans. We look forward to growing this program by introducing new products that align with our mission fulfillment, while continuing to diversify our investor base."

BofA Securities, Inc. and Oppenheimer & Co. Inc. acted as joint bookrunners along with CastleOak Securities, L.P. and Seaport Global Securities LLC, as selling group members. Dechert LLP served as legal advisor to Farmer Mac. Morgan, Lewis and Bockius LLP served as legal advisor to BofA Securities, Inc., Oppenheimer & Co. Inc., CastleOak Securities, L.P., and Seaport Global Securities LLC.

About Farmer Mac

Farmer Mac is driven by its mission to increase the accessibility of financing for American agriculture and rural infrastructure. As a secondary market for our nation's agricultural and rural infrastructure credit, we provide financial solutions to a broad spectrum of customers supporting rural America, including agricultural lenders, agribusinesses, and rural electric cooperatives. We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America's rural and agricultural communities. Additional information about Farmer Mac is available on Farmer Mac's website at www.farmermac.com.

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SOURCE Farmer Mac

FAQ

What is the value of Farmer Mac's (AGM) latest FARM series securitization in 2024?

Farmer Mac's latest FARM series securitization (FARM 2024-2) is valued at $318.8 million.

How many agricultural mortgage loans are included in Farmer Mac's (AGM) FARM 2024-2 securitization?

The FARM 2024-2 mortgage pool consists of 446 agricultural mortgage loans.

What are the components of Farmer Mac's (AGM) FARM 2024-2 securitization structure?

The securitization includes a $294.9 million senior tranche guaranteed by Farmer Mac (divided into classes A, A1, and A2) and a $23.9 million unguaranteed subordinate tranche.

How many FARM series transactions has Farmer Mac (AGM) completed since 2021?

Farmer Mac has completed five FARM series transactions since 2021, with FARM 2024-2 being the latest.