U.K. bank Lloyds TSB announced it will make a refinancing contribution to its ARKLE master trust.
According to Deutsche Bank analysts. without the sponsor's action, the trust would have probably not been able to redeem the bonds on schedule given the low current CPR of 16%.
“While perhaps not entirely unexpected, the signaling of support is positive for all Lloyds trusts,” analysts said. “That junior bonds will be redeemed at par should aid their pricing; in an environment where redemption dates are met, prices of around 90 [basis points] on short-dated triple-B subs look attractive.”
Barclays Capital analysts said that the news of the cash injection is a positive for the Arkle trust, showing the sponsor’s commitment to meeting the scheduled payments and supporting its master trust. They expect all future payments to be met in the Arkle master trust.
The parent company earlier this year made a series of cash injections in two of the master trusts it sponsors (Arkle and Permanent) to enable expected maturities to be met.