BPCE Pursuing 2nd French RMBS Since Crisis

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Groupe Banque Populaire, Caisse D’Epargne (BPCE) is pursuing a second securitization from a revolving pool of up to €50 billion in residential mortgage loans held in its two-year-old asset-backed fund, according to Standard & Poor’s.

The BPCE Master Home Loans FCT trust, through Class A-2016-01 series of notes, is planning to issue an undetermined amount of four-year notes from the pool that as of April 2016 had a principal outstanding balance of €43.4 billion (US$47.71 billion). The notes will carry an 11.8% credit enhancement supported by outstanding Class B notes from the pool.

BPCE’s initial ABS issuance in May 2014 from the pool totaled €44.07 billion, split into eight class A notes slices as well as a Class B notes tranche.  

The 2014 transaction was first from France’s second-largest bank since residential mortgage-backed notes offerings in the country returned to the European investor zone after a six-year, post-crisis hiatus.

The loans were all originated by BPCE or by BPCE Group-affiliated financial institutions Banque Populaire and Caisse d’Espargne, according to a presale report published Monday by S&P. S&P has assigned provisional ‘AAA’ ratings to the notes, which are supported by 11.8% credit enhancement. The new issue’s unrated tranche of Class B notes will constitute the main portion of an 11.8% credit enhancement on the notes.

The 10-year revolving pool consists of primarily fixed-rate residential loans, secured by a first-lien or from a guarantor such as CEGC or Socami. Nearly 81% of the loans depend on the guarantee, and lack a first-ranking mortgage. In France, a guarantee secures 50% of existing loans and two-thirds of newly originated loans.

BPCE followed another French financial institution, Credit Foncier de France (CFF) into the RMBS field two years ago when CFF’s trust issued the first residential mortgage-backed securitization since 2008, according to a Moody’s Investors Service report from 2014.

S&P expressed optimism that the quantitative easing efforts by the European Central Bank will abet strong housing demand into 2017 as prices remain flat but with the economy expected to continue improving.  

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