WALL STREET – The initial offering of $3.8 billion of NCUA Guaranteed Notes, securitized by toxic assets owned by U.S. Central FCU, will be split into two pools: one with a fixed interest rate and the other with a floating rate.
Both pools are securitized by residential mortgage backed securities owned by U.S. Central, the first of as much as $35 billion of bonds securitized by legacy assets held by five failed corporate credit unions, according to Fitch Ratings Service, which rated the bonds.
The bonds have been rated AAA because they carry a federal guarantee. The NCUA, which is unrated, will provide a full and unconditional guaranty of timely payment of interest and principal to each class of senior notes, according to Fitch. As an agency of the executive branch of the U.S. government, the NCUA's obligations under the guaranty agreement are backed by the full faith and credit of the U.S.
The federal guarantee makes the notes permissible investments for federally insured credit unions.
