Co-OP’s U.K. RMBS at Risk for Moody’s Downgrade

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Moody's Investors Service said today that it will review for possible downgrade the ratings of 28 tranches in eight U.K. residential mortgage backed securities (RMBS) transactions sponsored by Co-Operative Bank.

The action follows Moody’s downgrade last week of Co-Op Bank by six notches: from ‘A3’/’Prime 2’ to ‘Ba3’/’Not Prime’.

The bank has two RMBS programs: the U.K. prime RMBS shelf, Silk Road; and the U.K. nonconforming program, Leek Finance series.

 Moody's said in its report today that it believes that the affected RMBS transactions are exposed to “increased payment-disruption risk following the downgrade of Co-Operative Bank.”  The ratings agency also cites that as a result of the downgrade, the deals now have insufficient back-up servicing and back-up cash-management arrangements.  

Co-Op acts as a servicer and cash manager in Silk Road and Cambric series of RMBS deals. Platform Funding Limited ("Platform"), which is part of the Co-Op, acts as servicer and cash manager in Leek Finance series.

Moody's placed on review Silk Road Finance Number One PLC and Silk Road Finance Number Two. The ratings agency said that it has also place on review all notes rated above ‘A3’ in the Leek series.

 

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