Banca Popolare di Vicenza got a warm welcome for its first residential mortgage securitization in three years. The deal,  Berica ABS 3, was upsized to €1.9 billion from €929 million originally, and it priced at spreads inside of intital talk.

The deal's five-year, €835 million ($1.36 billion) senior tranche priced a 105 basis points over the three month Euribor, according to a Standard & Poor’s report, which cited pricing information provided by Informa Gloabl Markets.  Initial price talk on the notes was in the area of 115 basis points.

The deal marks a return for the Italian bank, which was last in the market with Berica Residential MBS SrL Series 9 in April 2011.                

Barclays, J.P. Morgan, Deutsche Bank, Banco Santander and Banca Popolare di Vicenza are the joint lead managers.

DBRS, which assigned ratings to the deal, noted in the presale report that the pool of loans have an average loan to value ratio (LTV) of 59.21%, which is low by wider European standards. “Low LTV levels are the norm in the Italian market,” explained analysts in the presale report.

Borrowers with lower LTVs usually are less likely to default than those who finance a larger portion of the purchase price of their home. When they do default, recoveries on loans with low LTVs tend to be higher.  

The mortgage portfolio is 2.64 years seasoned, which indicates that loans were originated in the period following the global financial crisis. “Loan originations, typically, were originated to stricter underwriting standards than in the vintages of the pre-2008 era,” said DBRS.  

There are few recent comparable deals; however in April, Veneto Banca priced the 3.7-year €550 million senior tranche of Claris RMBS 2014 at 115 basis points over the three month Euribor, according to S&P. That deal was the first investor-placed Italian RMBS since Banca Popolare di Vicenza's April 2011 deal.

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