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Lloyds £2.1bn prime RMBS gets AAA rating

Lloyds Banking Group is launching a £2.1bn securitisation backed by prime residential mortgages.

The transaction is made up of three US-dollar-denominated tranches and two sterling-denominated tranches, backed by mortgages originated by Halifax and Bank of Scotland.

Fitch Ratings has assigned the RMBS an AAA rating. The notes are the 18th issue from BOS’s Permanent master trust programme and the ninth issuance through Permanent Funding No 2.

In July, the group launched a £3.3bn RMBS backed by mortgages originated by Cheltenham & Gloucester and Lloyds TSB. Lloyds Bank Corporate Markets, Barclays and JP Morgan are joint lead managers on the dollar notes and LBCM is the lead manager on the sterling notes.

There have been a number of issuances from lenders in the past month, including a £1.7bn issuance from Nationwide and a £829bn buy-to-let RMBS and £3.5bn RMBS from Royal Bank of Scotland in October. Earlier this month, Moody’s revealed the performance of prime RMBS remained stable in the three months to August, with arrears rates staying at around 1.8 per cent.

Industry consultant Jonathan Cornell says: “In the past month, there have been a few big transactions and if you look at the potential lending from these, it is a pretty significant amount in a mortgage market of £140bn. I do not think we should be jumping up and down and saying the good times are back but it is good news.”

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