View more on these topics

Northern Rock loans to be part of biggest securitisation since crash

House-Home-Property-Ladder-Mortgage-700x450.jpg

US investment firm Cerberus Capital Management is set to launch Europe’s biggest mortgage-backed securitisation since the financial crisis.

The bond is reportedly backed by £6.2bn worth of mortgages originated by Northern Rock, which had to be nationalised in 2008.

Cerberus bought £13bn of Northern Rock mortgages off the Treasury in November. It has already sold £3.3bn of the portfolio to TSB, so the latest deal means it will have offloaded around three-quarters of the loan book it bought just six months ago.

Securitisation, where investors buy bonds backed by mortgage payments, is a key form of funding for mortgage lenders. However, investors shied away mortgage debt in the aftermath of the crisis as they were considered toxic.

Experts say the size of the deal shows investors have recovered their appetite for mortgage debt.

Nomura Holdings Inc’s head of European ABS strategy David Covey told Bloomberg: “It’s a huge deal, and the fact that such a large volume of U.K. mortgage bonds can be sold shows there is strong demand for high-quality securitisations.

“That said, the size belies the fact that the investor base remains thin, as it’s likely a substantial portion of the deal was pre-placed with a few large investors.”

Henderson Global Investors head of ABS investment Edward Panek told Reuters: “We always assumed it was going to come at some point, in some way. That’s a pretty significant chunk of issuance that has now effectively been dealt with. From a technical point of view, it’s good news for the market.”

Recommended

3

Former Aifa boss Cummings named Investment Association chief exec

Former Aifa director general Chris Cummings will be the new chief executive of the Investment Association. Cummings, who is founding chief executive of financial services lobbying organisation TheCityUK, joins the trade body six months after Daniel Godfrey was ousted from the role. He was also previously director general at AIFA, having spent 7 years at […]

Elderly-People-Paperwork-Old-Pension-Pensioners-700x450.jpg
2

Over 55s unconvinced by Osborne’s pension freedoms

Fewer than half of over 55s are convinced George Osborne’s pension freedom reforms are a good thing, new research suggests. An online survey commissioned by the Institute and Faculty of Actuaries quizzed 1,408 people aged 55 or over, but found the British public remains divided on the landmark reforms. Just 44 per cent said the […]

3

Treasury slashes Pension Wise budget

The Treasury has slashed the Pension Wise budget by more than a quarter, with advisers’ levy for the service set to drop by £2m. Documents published by the FCA alongside its 2016/17 business plan reveal the budget for the existing guidance service will drop 27 per cent, from £39.1m to £28.7m. The 2016/17 funding requirement […]

HSBC-Branch-Building-700x450.jpg
3

HSBC to roll out simplified advice to investors with £15k

HSBC’s new face-to-face simplified advice service will be extended to people with savings as low as £15,000. The bank’s offering, due to launch this week, will start by targeting people with £50,000 but will eventually be aimed at those with just £15,000, the Financial Times reports. HSBC head of UK wealth Caroline Connellan says: “Full […]

Bonds in 2017: Stick or twist?

Royal London Asset Management Bond Fund Managers Paola Binns and Craig Inches look at why short duration could be a key tactic for fixed income investors during 2017. Read the full article here The value of investments and the income from them is not guaranteed and may go down as well as up and investors […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. To plagiarise and adapt:

    Wrap up your rubbish in an old kit bag and flog it, flog it, flog it. (To the stupid?)

Leave a comment