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Lehman Brothers launch new UK RMBS deal

Lehman Brothers has launched another residential mortgage-backed securitisation deal made up of near-prime, interest only, self-cert and remortgages.

Eurosail UK 2007-5NP follows on from its previous RMBS which was backed by loans originated by Alliance & Leicester for Southern Pacific Mortgage Limited.

Sources have indicated that the Eurosail Prime UK-2007-A deal which was due to close last week was not placed externally after pricing talk ended.

The new transaction features multiple originators. It comprises mortgages originated by SPML (51.34 per cent), Preferred Mortgages (39 per cent), Matlock London (6.7 per cent) and Alliance & Leicester (2.96 per cent).

According to Fitch, this deal has a higher proportion of near-prime loans – at 78.69 per cent) – compared to Eurosail UK 2007-A which had 45.86 per cent.

Fitch says that the collateral in this RMBS has a higher proportion of loans with CCJs – 20.25 per cent – and BO/IV1 (1.1 per cent) which are absent from the previous RMBS.

Its triple A 2.6 years notes are currently being priced at +70 basis points.

A sign of how much the credit crunch has had an impact on RMBS deals can be seen when compared to the +12 bps level achieved by a previous Eurosail UK 2007-2NP deal done in March.

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On balance

Despite the economy slowing in the first quarter, the US markets still represent good value, especially as GDP is expected to remain stable in the second half of the year and into 2008. It is worth bearing in mind that the US may not be the fastest-growing economy but it is still the biggest and it benefits from the rapid growth seen internationally.

Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.

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