Lloyds £2.5bn RMBS driven by US demand
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ROBERT PLEHN, STEP FORWARD FOR MARKET
Lloyds Banking Group says its latest £2.5bn residential mortgage-backed securitisation deal was partially driven by strong demand from US investors.
The deal is backed by prime Bank of Scotland mortgages under the Permanent programme.
It is split into four tranches and is notable because it offers assets priced in US dollars as well as in pounds and euros.
The dollar-denominated tranche carries an interest rate of three-month LIBOR plus 1.15%.
The sterling tranches are priced at three-month LIBOR plus 1.3% while the euro-denominated portion is three-month Euribor plus 1.25%.
The deal is being managed by Lloyds TSB Corporate Markets, Bank of America Merrill Lynch and JP Morgan.
Robert Plehn, head of structured securitisation at Lloyds group, says: “We are delighted with the success of our latest RMBS issuance which has seen great domestic, European and US demand.
“This is another step forward in the reopening of the market, especially given the strong participation of investors from the US - a region that has not been tapped by European issues since 2007.”
The latest Lloyds group issue comes just four months after its much- heralded £4bn RMBS deal last September.
Some pundits took that deal as a sign the step forward for marketmarket was on the way to recovery, believing that more securitisation deals would follow and provide more funding for mortgages.
But others had their doubts that it would pave the way for more securitisations as it was the specifics of the Lloyds group deal that made it so attractive.
Nationwide was the second lender to launch a securitisation deal last October, valued at £3.5bn.
But Paul Howard, head of corporate accounts at Nationwide Building Society, told attendees at a Mortgage Brain conference last week that it may be some time before the market opens up fully.
Howard says “It’s fantastic to see securitisations - but the market is still largely closed. Deals are hugely expensive for lenders and it’s not yet an alternative to retail funding, more an additional capability.”
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Readers' comments (1)
William | 1 Feb 2010 2:44 pm
All the major UK Master Trust issuers will have to bring deals at some point this year. The rest if bluff. They can run down their mortgage books as much as they want but they will all still need to fund and securitisation is an essential part of the mix especially for UK and Spanish bank borrowers whose access to the covered bond market is much more limited than the French or Germans.
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