Principality launches first securitisation
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Principality Building Society has entered the securitisation market for the first time with a £686m issue.
The issue, called Friary No. 1 plc will be serviced by the society and has been assigned a provisional AAA rating by Moody’s.
Principality will act as the servicer and cash manager in the transaction and HML will be appointed as the back-up servicer and Citibank, N.A, London Branch will be the back-up cash manger.
This represents the society’s first RMBS transaction of UK prime residential mortgage loans, made up of mortgages with an average LTV of 58.01%,
The society had its financial strength rating upgraded by Moody’s this week to D+ from D- with a stable outlook.
The standalone rating now maps to Ba1 on the long term rating scale, previously mapping to Ba3.
The long and short term debt and deposit rating of Baa2/P-2 remain on review for possible downgrade and the subordinated debt rating has been upgraded by four notches to Ba2 from B3.
Moody’s says if Principality is downgraded below Baa2, a liquidity reserve will be funded by trapping principal receipts to give a total reserve of 4% of the outstanding Class A notes in case the outstanding reserve fund is below this level.
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