Nationwide securitisation success gives it the taste for another issue
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Nationwide is likely to launch another securitisation next year following the success of its recent £3.5bn issue.
The lender launched the issue through its Silverstone securitisation vehicle on October 23, backed by prime mortgage assets with an average LTV of about 65%.
Although the deal is formally due to close on November 3 the issue has already seen significant take-up, with investors demanding more than double the amount of assets available.
Mark Hedges, head of structured finance at Nationwide, says: “It was an exceptional performance and we see it as positive for the residential mortgage-backed securities market because it shows investors want to buy this type of product.”
Hedges says Nationwide plans to use Silverstone again next year and that it will be used as a regular funding platform in the future to ensure the lender has diversified sources of funding.
Some 30% of Nationwide’s balance sheet is funded by wholesale sources, with the remainder funded by retail deposits.
The Nationwide issue was only the second such deal to take place in the financial crisis, following the widely heralded £4bn mortgage-backed bond issue by Lloyds Banking Group in September.
Hedges says such deals are an early move towards the revival of the RMBS market.
Tony Ward, chief executive of Home Funding, says there may now be a lull between deals but he is still optimistic about the prospects of the securitisation market.
He says: “You’ve got to look at the debt burden in the market. The amount of funding that has been made available through various government and Bank of England schemes adds up to hundreds of billions of pounds.
“How is that money going to be paid back without a properly functioning wholesale market?”
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