Fannie Mae Launches Cash Tender Offers for Eight CAS Note Classes

Fannie Mae launched fixed-price cash tender offers Monday for eight classes of Connecticut Avenue Securities notes, giving holders until Oct. 2 to decide whether to sell the targeted securities back to the mortgage-finance company. The classes come from CAS issuances completed in 2022 and 2023, and the principal balances listed in the offer materials add up to about $1.59 billion.

The offers are structured on an “any and all” basis. Fannie Mae says that means there is no ranking among the eligible notes and no cap on the amount it may accept, subject to the terms and conditions of the offers. Announced consideration ranges from $1,016.20 to $1,041.40 per $1,000 of original principal amount, with the payment calculation incorporating monthly certificate percentages available as of Sept. 25.

Fannie Mae says the purpose is to reduce the interest expense associated with the targeted CAS notes. The company also says it considered ongoing interest costs, capital treatment and its risk-management objectives when deciding which classes to include. Notes that are tendered and accepted will be retired and canceled, although Fannie Mae’s reference-tranche calculations will continue to treat the canceled amounts as outstanding for specified structural purposes.

Eight classes span 2022 and 2023 CAS vintages

According to Fannie Mae’s Sept. 28 tender announcement, the offers cover one class from Series 2022-R08 and seven classes across Series 2023-R01, 2023-R02, 2023-R04, 2023-R05 and 2023-R06. The largest listed principal balance belongs to the 2023-R04 Class 1M-1 notes at $377.1 million, while the smallest is the 2023-R01 Class 1M-1 notes at $76.3 million.

The highest announced tender consideration is $1,041.40 per $1,000 of original principal for the 2023-R04 Class 1M-2 notes. The lowest is $1,016.20 for the 2023-R02 Class 1M-1 notes. The remaining consideration levels are $1,022.10 for 2022-R08 Class 1M-2, $1,016.80 for 2023-R01 Class 1M-1, $1,033.70 for 2023-R01 Class 1M-2, $1,017.50 for 2023-R04 Class 1M-1, $1,036.70 for 2023-R05 Class 1M-2 and $1,028.00 for 2023-R06 Class 1M-2.

Holders whose notes are purchased are also due accrued and unpaid interest from the most recent interest payment date up to, but not including, the settlement date. Fannie Mae expects settlement on Oct. 6. Notes accepted through the guaranteed-delivery procedure are expected to be purchased on Oct. 7, although accrued interest on those securities is still calculated only through the expected Oct. 6 settlement date.

BofA Securities and Citigroup Global Markets are serving as dealer managers for the offers, while Global Bondholder Services Corporation is the tender and information agent. Holders may withdraw tendered notes at any time up to the 5 p.m. New York City deadline on Oct. 2, unless Fannie Mae extends or terminates the offers earlier under the offer documents.

Fannie Mae says lower interest expense is the goal

The tender is part of Fannie Mae’s management of outstanding CAS funding costs rather than a retreat from credit risk transfer. In its tender-offer FAQ, the company says the offers are intended to lower interest expense on the selected notes and do not signal a change in its broader plans for transferring mortgage credit risk to private investors.

Connecticut Avenue Securities are a central part of that program. CAS gives investors exposure to a portion of the credit risk Fannie Mae retains when it guarantees single-family mortgage-backed securities. Fannie Mae says that, as of the second quarter of 2026, roughly $2.5 trillion of unpaid principal balance in single-family mortgage loans had been partially covered through CAS issuances, measured at the time those securities were issued.

The program remains active in the new-issue market as well. Fannie Mae’s CAS pricing page says it had issued approximately $3 billion of CAS notes in 2026 through Sept. 16 and about $75 billion since the program began in 2013. That backdrop is important because repurchasing older notes and issuing new CAS securities can occur at the same time as the company adjusts the cost and composition of its outstanding credit-risk-transfer obligations.

Fannie Mae also identifies a possible market effect for holders who do not participate. If notes are successfully tendered and canceled, the amount left available for secondary-market trading will shrink. The company says a smaller float may reduce trading liquidity or price stability. At the same time, it says the tender does not change calculations on remaining CAS notes or associated credit enhancements simply because some notes in the same reference structure are repurchased.

October 2 deadline sets a short decision window

The offers were announced on Sept. 28 and are scheduled to expire four days later, creating a relatively short period for eligible holders to assess the fixed prices against the value of continuing to own the securities. Fannie Mae’s materials emphasize that the tender prices are stated per $1,000 of original principal amount and that certificate percentages are part of the payment calculation, a detail that matters for amortizing CAS securities.

Participation is voluntary. Investors who do not tender eligible notes can continue to hold them under their existing terms, while investors whose notes are accepted receive the tender consideration and applicable accrued interest described in the offer documents. Fannie Mae cautions holders to evaluate the decision based on their own circumstances and to review the formal offer materials rather than relying solely on the summary announcement or FAQ.

The next concrete milestone is the Oct. 2 expiration time. If the timetable is not changed, settlement is expected on Oct. 6, followed by purchases on Oct. 7 for notes validly submitted through the guaranteed-delivery process. Fannie Mae would then be expected to disclose the amount of each class tendered and accepted, providing a clearer picture of how much outstanding CAS debt the company actually retires through the offers.