West Bromwich Building Society has launched a £420m securitisation – its first in over a year – which will be used to help fund mortgage lending.
The bond, which has been given a AAA rating by Moody’s, is called Kenrick No.2 and is backed by prime residential mortgage loans, some of which have been on the mutual’s mortgage book since 1988. The average length of time a loan has spent on the building society’s book is around eight years.
It is made up of £380m worth of A notes, which have been placed with external investors, and £40.6m of B notes, which the building society has retained.
West Brom says none of the loans that make up the pool are in arrears. The average loan balance of the pool is around £75,000 and the average loan-to-value is around 58 per cent.
The lender is paying a coupon of Libor plus 0.65 per cent for a three-year weighted average note.
The transaction closed earlier this week and the building society says it was oversubscribed by 2.2 times.
West Brom last launched a mortgage-backed security in April 2012, a £410m issue which was originally meant to have launched the previous November but it was delayed due to fears over conditions in the Eurozone, as revealed by Money Marketing’s sister title Mortgage Strategy.
The lender is also part of the Government’s Funding for Lending scheme but it is understood that it has not yet made use of the funding facility.
Last week, Santander started to market a residential mortgage-backed security, called Holmes Master Issuer 2013-1. The transaction has not yet closed but a note from Fitch Ratings shows the pool size is expected to be at least £2bn.
Last week, West Brom confirmed it had registered the brand “The West Brom for Intermediaries” in anticipation of “phase two” of its re-entry into the broker market.
The lender, which pulled out of the broker sector in December 2008, opened up a panel of four intermediary firms in November and plans to open this to other firms by autumn.