Freddie Mac, which is trying to manage its borrowing costs better, offered to repurchase as much as $30 billion of debt from investors Monday.
Investors may choose to tender debt from prices as low as 99.89 cents on the dollar to as high as 103.12 cents from a list of notes with $69.9 billion in outstanding balances, Freddie said.
Eligible securities mature this year and next. Freddie Mac had $899.5 billion of debt as of April 30.
"It's a liability management trade for Freddie Mac," said Mohit Sudhakar, a senior director of debt portfolio management at the company. He said Freddie will eventually replace the floating-rate debt being retired with longer-maturity notes, where the yields being demanded on its borrowing over benchmarks are "extremely attractive."
In December the Federal Reserve Board began buying Freddie Mac, Fannie Mae and Federal Home Loan bank debt to lower home financing costs, driving down spreads after a jump to records in the so-called agency market last year.
Freddie Mac will not replace some of the debt repurchased in the near term, and will issue more debt maturing in less than a year in the so-called discount note market to maintain some of its borrowing level, Sudhakar said.
The tender offer will expire June 5.