The market focus in Europe is now on the first true U.K. RMBS since the 2007 issue from Santander U.K., FOSSE 2010-1. The deal priced and closed today.

The deal, which was built through traditional book-building and investor roadshows in the U.K. and Europe, was originally targeted at £1 billion ($1.5 billion). However, as a result of strong investor demand, the deal was upsized to £1.4 billion. Barclays Capital, Deutsche Bank and Credit Suisse are all leads on the deal along with Santander.

“The feedback from investors was incredibly positive resulting in us increasing the size of the transaction by over 40%,” a spokesman for Santander U.K said. “Following an extensive roadshow in the U.K. and continental Europe, over 40 good quality real money investors across 12 jurisdictions participated in the transaction.”

In total, over 40 accounts across 12 countries participated in the transaction. According to a Santander statement, the deal issued across three triple-A tranches saw its £205 million five-year floating tranche priced at 120 basis points over the three-month Libor; the €775 million five-year floating tranche priced at 120 basis points over the three-month Euribor; and the £525 million seven-year fixed tranche priced at 120 basis points.

 “This deal represents a significant positive step for European RMBS because, unlike competitor deals recently announced, the Fosse Securitization does not include an investor put back to the sponsoring bank, making this a true Securitisation transaction,” the spokesman said. “This demonstrates the fantastic quality of the program, the underlying collateral and confidence the market has with Santander U.K. plc.”

The underlying mortgages were originated by Alliance & Leicester, which Santander tookover in 2008.

Earlier this month, U.K.'s Co-operative Bank launched a £2.5 billion deal through its Silk Road Finance Number One vehicle, although ₤1 billion was pre-sold to JPMorgan.

Only the triple-A rated class A1 note was publicly offered and, according to Unicredit analysts, of that only £375 million was placed with third party investors out of an initial £500 million targeted.

“The shortfall in the actual placement compared to the originally targeted volume reflects mainly the current threadbare Sterling floater universe for which demand is obviously limited,” Unicredit analysts said. “Furthermore, some investors seem to not be entirely comfortable with the Co-op exposure embedded in Silk Road’s structure: though rated, the building society is obviously not publicly listed, which seems to have been unfavorable.”

In January, Lloyds Banking Group launched its £2.5 billion, multi-currency deal that also offered a U.S. dollar tranche.

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