NCUA Launches New Offering Of Corporate Bailout Bonds

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WALL STREET – NCUA plans to sell another $1.5 billion of corporate bonds later this week, resuming its efforts to raise funds to finance the corporate credit union bailout.

This week’s offering of NCUA Guaranteed Notes will be backed by floating-rate residential mortgage backed-securities owned by the five failed corporates, U.S. Central FCU, WesCorp FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU, sources told the Credit Union Journal this morning.

The offering will be underwritten by Barclays Capital, which sold $17.8 billion of the corporate bonds in the final months of last year.

The bonds were created by the cash flows, that is the interest and principal payments, on some $35 billion of toxic MBS held by the failed corporates, and are guaranteed by the federal government.

The latest offering is expected to launch Thursday or Friday.

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