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Securitisation market back on track after Santander’s £3.7bn success

Santander UK has sold £3.75bn of mortgage-backed bonds in the biggest publicly placed securitisation issue in the UK since the 2007 credit crisis.

The deal, launched last week through the securitisation vehicle Fosse, attracted orders in excess of £5.5bn, resulting in a final deal worth £3.75bn.

In total, the order book contained more than 130 orders across 11 countries. It is made up of seven AAA tranches covering a range of maturities and currencies.
A portfolio of prime, first-lien, owner-occupied mortgages originated by Alliance & Leicester will secure the Fosse notes.

The securitisation market has dried up since the credit crisis, with investors weary of investing in bonds backed by mortgage assets.

However, Northern Rock announced in March that it is planning to re-enter the market for the first time since its Government bailout.

Both Northern Rock and Skipton Building Society issued smaller deals in March.

Santander UK chief financial officer Justo Gomez says: “The size of this deal represents another positive step for European residential mortgage-backed securities. It is the first time since 2007 that a fully publicly placed securitisation transaction will raise more than £3.5bn.

“The demand for the deal once again shows the strength and confidence the market has in Santander UK.”

Home Funding chief executive Tony Ward says: “It is a big deal. It looks like there was massive interest in it, and it is an international investment which is exactly what we want in the UK banking system. It is all very good news. This is a big tick for Santander but it is also for the UK mortgage market.”

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