The Dutch Treasury will begin selling from its $11.6 billion portfolio of U.S. non-agency RMBS held in the Illiquid Assets Back-up Facility, it announced in a press release on Wednesday.
The State has hired Blackrock to manage the sale process.
The Illiquid Assets Back-up Facility is one of the measures taken by the Dutch State to preserve financial stability in the banking sector. The transaction resulted in a transfer of the risk on 80% of ING’s portfolio of US non-RMBS to the Dutch State. On November 1, 2013, the Dutch State announced it had reached an agreement with ING to unwind the IABF.
According to a Standard & Poor’s report the Dutch holdings constitute about 1.5% of the $700 billion U.S. non-agency market, and 6% of the U.S. option ARM market. Over half of the holding are option ARMs.
The Dutch State Treasury Agency said that “a high level of interest by investors for non-agency RMBS securities,” supported its decision to start the sale.
Although the plan is to sell the bonds over a twelve month period there is no fixed deadline for completion of the sale of the portfolio. “As long as the pace of sale is measured, we do not expect this sale by itself to have a huge effect on prices,” said analysts at Barclays in a Nov. securitization report.