Leeds Building Society has raised £250m of 10-year long-term funding through a covered bond issue, enabling it to increase its mortgage lending.
Leeds says it is the first UK sterling covered bond backed by residential mortgages and the first sterling covered bond of any type since the start of the credit crunch.
Ian Ward, chief executive at Leeds, says: “It is very pleasing to raise £250m through the covered bond issue, particularly as this market has been closed for so long.
I am sure that other financial businesses will look at the market to raise funds and this issue has the potential to be the forerunner to many more of its type, as organisations look to generate long-term wholesale funding.”
He adds: “The society has also raised a further £250m of wholesale during recent months, for periods between three and five years, through private placements and other arrangements. This means that we are now very well placed, having secured most of our long-term funding requirements for 2010 to 2011, to increase the level of our residential mortgage lending.
“Our ability to raise both wholesale and retail funding enables us to launch some very competitive mortgage deals for customers including our market leading range of 5-year fixed rate, discount and buy-to-let mortgages, as well as shared ownership.”