£4Bn Lloyds deal is shot in the arm for market
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This is the first deal using a residential mortgage-backed bond in Europe for over a year.
One source tells Mortgage Strategy that this issuance has whetted investor appetite and that another major lender is also planning to issue a large RMBS deal, possibly before the year is out.
The mortgages backing the Permanent 2009-1 Lloyds group deal are all prime AAA-rated assets from HBOS.
The transaction is made up of three tranches. One tranche of £1.65bn has already been placed with an investor. An additional sterling tranche of £1.65bn is priced at 170 basis points over LIBOR, discounted from 180 basis points. The third tranche of €750m is priced 170 basis points over Euribor.
The last lender to launch such a deal was Alliance & Leicester with a £400m issuance in August 2008. Since then the securitisation market has effectively been closed.
A&L's deal came three months after HBOS' last securitisation deal of £500m, backed by prime mortgages from Halifax.
Robert Plehn, head of structured securitisation at Lloyds group, says: "This offer was significantly oversubscribed, underlining the high asset quality and brand name of the Permanent programme.
"The success of this issue further widens the funding options available to the group. We believe we have taken an important step towards helping reopen the European securitisation market."
Steve Khan, proprietor of The Mortgage Trading Consultancy, welcomes the move.
He says: "This is brilliant news. It is a huge deal and is just what the market needs.
"What we want now is for the deal to have a positive take-up."
