Ginnie Mae finally made its long-awaited Remic dream a reality May 26 when Merrill Lynch completed the program's first-ever pricing and put the instrument on the market to "encouraging" investor interest, despite an otherwise languid real estate mortgage investment conduit market.
The Ginnie issue, identified as Remic 94-1, is backed by $500 million in 8% Ginnie mortgage-backed security certificates. It was priced May 26, has a startup date of June 1, and will settle June 30. Divided into 19 tranches, the instrument has a weighted average maturity of 340 months and a PSA speed of 200%. Merrill served as the lead underwriter on 94-1, while M.R. Beal & Co. served as the co-underwriter.
"We've been pleased with the reception," said a Merrill Lynch spokesman, who added though the government agency Remic market has been "very difficult" lately, Merrill has seen broad-based initial support for the instrument.
That support has come from "a variety of investors," he said, "ranging from foreign financial institutions to money market managers. Obviously these few days [May 26 to 31] are slower because of the weekend and Memorial Day holiday, but we expect a successful conclusion, just as we've had a successful beginning."
According to Jeff Kronthal, president of Merrill Lynch Mortgage Capital, the issue is a "landmark for the mortgage-backed securities market."
Ginnie and its team of Remic experts were eager to get the first issue on the street - 94-1 arrived on the first possible day it could be issued. When Ginnie President Dwight Robinson announced the details of the program April 12, he projected the first issue would arrive within 45 to 60 days. May 26 marked the 45th day since the announcement.
Ginnie also worked quickly to complete its Remic team, which was finalized just one week prior to the 94-1 issue. Now serving as sponsors and under writers are four investment firms: Merrill, CS First Boston, Bear Stearns, and Goldman Sachs. Co-sponsors include: Beal; Utendahl Capital Partners; Pryor McClendon; Counts & Co.; W.R. Lazard; Laidlaw & Mead; and Blaylock & Partners.
Now serving as trust counsels are: Brown & Wood; Reid & Priest; Hawkins, Delefield & Wood; Dewey Ballentine; and Skadden, Arps, Slate, Meager & Flom.