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Auction Details: Reference Bills® SecuritiesReference Bills® securities are sold weekly through a uniform price auction process. Bids are submitted via the Internet from a group of participating dealers. The following sections cover the details of Freddie Mac's 2008 Funding Calendar [PDF 105K] and auction distribution process. Auction schedule: Each week, Freddie Mac auctions three- and six-month Reference Bills securities on Mondays and one-month Reference Bills securities on the last Wednesday of each month. Twelve-month Reference Bills securities are auctioned every fourth Monday. Each week's auctions are announced no later than 10:30 a.m. ET on the preceding Friday, to help promote more robust "when-issued" trading and provide ample notice to investors. In the event of intervening U.S. holidays, announcements are accelerated to the preceding business day. Auctions begin at 8:00 a.m. ET and close at 9:45 a.m. ET on the scheduled dates. In the event of an intervening U.S. holiday on Monday and/or Wednesday, the auction will be held on the next available business day. All auction schedule changes due to holidays are clarified in the regular weekly announcements. Please see the 2008 Funding Calendar [PDF 105K] for specific auction dates. Concession fees: Freddie Mac will pay its dealers a one basis point (bp) concession fee on all successful customer bids. The 1 bp concession is an annualized rate based on the award amount and will be reflected in the dealer's net proceeds. Size: As with all of Freddie Mac’s debt products, the sizes of the Reference Bills securities auctions reflect underlying market demand. Initial issues of Reference Bills securities are for a minimum of $1 billion. Reopenings: Similar to U.S.Treasury bills, Reference Bills securities are re-opened when the remaining maturities of outstanding issues coincide with regular auctions of new, shorter maturity issues. For example, twelve-month Reference Bills securities are re-opened with six and three months left to maturity, while three-month Reference Bills securities are re-opened with one month to maturity. These reopenings will produce larger issues of Reference Bills securities with greater potential liquidity. Dealer group: Aiming to achieve widespread global distribution, Freddie Mac accepts orders through its participating dealer group, which includes the following members:
Competitive and non-competitive orders: In order to accommodate investors of all sizes, Freddie Mac also accepts non-competitive customer orders. Non-competitive orders must be for at least $1,000 (and in $1,000 increments thereafter) up to $5 million. Non-competitive orders greater than $5 million may not exceed 15% of the total amount offered and must be expressed in round increments of $1 million. All Reference Bills securities auctions provide for a maximum of 15% of the total offering to be awarded on a non-competitive basis. Allocations of non-competitive orders, if necessary, give first priority to orders of less than $5 million and are subject to rounding. All competitive bids must be for a minimum of at least $1 million, and in $1 million increments thereafter. Bid limits: To ensure broad-based distribution, Freddie Mac limits the volume awarded to any single participant to a maximum of 35% of the auctioned amount. Individual bids are capped at 35% of the auction total, whether for customers’ or for dealers’ proprietary accounts. These measures ensure that a smooth, predictable debt supply will be brought to market. Discount notes program: Freddie Mac continues to post discount notes daily. Reverse inquiry discount note business, a highly popular aspect of Freddie Mac’s traditional discount note program, is encouraged. However, new discount notes are issued with target maturities that are not in conflict with the maturity dates of the Reference Bills securities program. Outstanding issues of three-, six- and twelve-month Reference Bills securities are not re-opened via reverse inquiry for matching maturities, unless the remaining life of the Reference Bills securities is less than 25 days. In addition, during any given auction week, Freddie Mac locks out the maturity date plus/minus seven calendar days on the three-, six- or twelve-month Reference Bills securities being auctioned and the maturity date plus/minus one calendar day for one-month Reference Bills securities.
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