Coventry Building Society has entered the securitisation market for the first time with a £1.1bn issue.
The issue, called Leofric No.1, is backed by a pool of prime owner-occupied mortgages originated by the society and its intermediary lending arm Godiva Mortgages. The average loan-to-value ratio of the pool is around 64 per cent.
Both Moody’s and Fitch Ratings have given the transaction a provisional AAA rating.
Coventry head of structured finance and funding Kris Gozra says the transaction will help support mortgage lending alongside retail savings deposits.
The issue follows the launch of Coventry’s €650m covered bond last October.
In March, Nationwide Building Society set up a £1.5bn RMBS while Credit Suisse launched the first sub-prime issue of the year with its £340m deal.
Coventry announced in March that it advanced £4bn in new lending throughout last year, a rise of 14.3 per cent from £3.5bn the year before.
This represents around 2.8 per cent of all mortgage advances and about 17 per cent of all advances by building societies.
For the year to December 31, Coventry’s profits rose by 12 per cent to £84.6m, up from £75.3m in 2010.
Emba group sales and marketing director Mike Fitzgerald says: “This is a sign that there is an opportunity to raise funds on the wholesale market for the right type of lender.
“If this goes well and is done sensibly, it could encourage other building societies to do the same and would help get the market moving.”