Groupe Banque Populaire, Caisse D’Epargne (BPCE) plans to issue up to 50 billion ($68.5 billion) in securities backed by French residential mortgages via a residential mortgage-backed securities (RMBS) program with a 10-year revolving period, according to a Standard & Poor’s presale report.
BPCE is one of the largest participants in the French mortgage market. The receivables were originated by participating Caisses d'Epargne and "Banques Populaires part of the BPCE Group for French private individuals.
S&P has assigned preliminary 'AAA' ratings to eight tranches of class A notes. The size of teh tranches has yet to be determined. The notes have an expected maturity between 2016 and 2020. At closing, the transaction also issued unrated class B notes, which S&P will not rate.
The legal final maturity date is the extended maturity date, which is 37 years after the end of the replenishment period. During the revolving period, the issuer can add new mortgage loans to the pool, or substitute maturing loans.
The portfolio comprises plain vanilla loan products that are mostly fixed-rate, amortizing loans that pay fixed installments. All of the loans are either secured by a first lien or benefit from a guarantee granted from a guarantor such as CEGC or Socami.
In France, a guarantee secures about 50% of existing loans and about two-thirds of newly originated loans, as opposed to standard mortgage loans. “The use of these guarantees has become increasingly popular, partly because it saves the cost of registering a mortgage,” according to the presale report.
In the securitization transaction, if the guarantor fails to perform when a borrower defaults, the servicer ( in this case Natixis) assumes the risk of other creditors registering a judicial mortgage on the property before it.
BOCE’s transaction follows Credit Foncier de France (CFF)securitization, CFHL-1 2014.
An S&P presale report on that deal did not indicate how the tranches in the capital structure would be sized. However the ratings agency said it expected to rate the class A and A2 notes, AAA’; the class B note Aa1’, the class C notes, A1’; the class D notes, Baa1’ and the class E notes, Ba1’. CFF may issue up to two additional series of class A2 notes after five years.
The underlying pool of loans also included a mix of first ranking mortgages or a guarantee extended by Credit Logement.
According to S&P, the investor-placed deal, priced the 3-year, 428 million, class A1 notes at three-month Euribor plus 37 basis points. The 5.1-year, 376 million class A2a tranche priced at three-month Euribor plus plus 65 basis points. The deal reopens French RMBS after an eight-year hiatus.