Price talk is emerging on the first UK residential mortgage-backed securitisation to be marketed publicly since the credit crunch took hold in August.
The AAA tranche of the Alliance & Leicester £225m securitisation, made up of buy to let and self-certification loans is being priced at around 40 basis points over Libor.
In normal market conditions, an AAA tranche on a prime RMBS would be around 10bps over Libor, with sub-prime around 17-25bps over.
But Homefunding chief executive Tony Ward says the A&L price is good news as it shows that the bond markets are no longer closed. He says: “I think it is a good sign, provided the deal gets away. At the moment everything is experimental so I would not look at this as where pricing has properly got to.”
Money Partners director of communications Bob Sturges adds: “As a lender, you would not want to fund at that level for a very long time but it is likely to represent a very good return for investors.”
The deal is due for settlement on November 14.