Kensington reveals plan to launch securitisation deal of up to £250m
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Signs of a recovery in the securitisation market were evident last week as Kensington revealed its intention to launch a security later this year.
The lender plans to issue between £175m and £250m of assets, made up of buy-to-let and prime deals.
In its annual report Kensington’s parent Investec says: “We look forward to executing our first securitisations during this year as the asset-backed securitisation market reopens.”
Although liquidity is no longer a constraint, it says the cost of raising and bearing surplus liquidity is having a negative impact on its net interest income.
The report adds: “We have little reliance on wholesale markets and the UK market is showing signs of growth. We are well positioned to take advantage of this.”
Kensington held £1.78bn of mortgages at the end of March of which £626m were near-prime, according to the report.
Impairment losses on loans and advances relating to the lender’s business now amount to £81.2m compared with £93.2m in 2009.
News of the issue came as Cambridge Place Investment Management, the US firm owned by Kensington founder Martin Finegold, filed a lawsuit against the US arms of Barclays, HSBC and the Royal Bank of Scotland for mis-selling mortgage-backed securities.
It also alleges lenders including Citigroup, Merrill Lynch and Goldman Sachs mis-sold securities.
Finegold founded Cambridge Place with Robert Kramer in 2002. A spokesman for the firm says Kramer, not Finegold, filed the suit.
Lord Adair Turner, chairman of the Financial Services Authority, last week claimed that demand for securitisation may never return as it made the market less stable.
Turner says: “Securitised credit could have achieved risk reduction but the way it was done undermined that potential and created a dangerous source of instability.”
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