New Offering Of Corporate Bailout Bonds

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WALL STREET – NCUA plans to sell another $3.5 billion of corporate credit union bailout bonds later this week, making a total of $16.5 billion to be sold over the past month.

The bonds, known as NCUA Guaranteed Notes, will be a mix of floating-rate and fixed-rate issues and will carry the guarantee of the federal government, like the other offerings.

The notes represent the cash flows, that is the interest and principal payments, of troubled mortgage securities held in the portfolios of the five corporate failures, U.S. Central FCU, WesCorp FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU. The actual mortgage securities will be continued to be held in trust by NCUA. meaning NCUA will continue to accrue losses on further deterioration of the collateral of the original securities.

Barclays Capital is the lead underwriter and co-underwriters are Citi, FTN, Sandler O'Neill and WFC. The notes are also available for credit unions through the U.S. Central-owned ISI Securities.

This is the fourth offering of the corporate notes, following sales of $3.85 billion, $3.76 billion and $5.48 billion.

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