First RMBS issue for Principality as Moody's upgrades society's rating
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Principality Building Society has made its debut into the securitisation market with a £686m issue.
Friary No 1 plc will be serviced by the society and has been assigned a provisional AAA rating by Moody’s. It comprises prime residential mortgage loans, with an average LTV of 58.01%.
Principality follows in the footsteps of Yorkshire Building Society which launched into the securitisation market in June with a £750m RMBS.
Last week Principality and Yorkshire had their financial strength ratings upgraded by Moody’s, along with Nationwide and Coventry.
All four have been upgraded by two notches while Newcastle and Nottingham building societies have been affirmed but with the outlook revised to stable from negative.
Marjan Riggi, vice-president and senior credit officer at Moody’s, says: “The upgrade of four building societies reflects their performance since the crisis and our expectations regarding their future performance. Our assessment recognises that the economy is slowly recovering and that banking and regulatory reforms are taking shape.”
Moody’s says the performance record of Nationwide, Yorkshire, Coventry and Principality during the past two years and to a lesser extent Newcastle and Nottingham has shown gradual improvement combined with better underwriting standards, which mitigated the downside risks.
But Moody’s also revealed last week that it is extending its review of the debt and deposit ratings of 14 UK financial institutions until mid-September. Lloyds TSB, Nationwide, Principality, the Royal Bank of Scotland and Santander UK are among the firms that remain on review for downgrade.
The ratings agency has extended the review which it announced in May to allow it to incorporate the potential effect of proposals from the Independent Commission on Banking.
The final recommendations of the ICB are expected on September 12.
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