The European market is bustling with action. Barclays priced its GBP5 billion ($8.6 billion) U.K. SME CLO Lambada Financing last Tuesday and on Wednesday had another GBP4.5 billion in the pipeline via its Gracechurch U.K. RMBS deal.
On Tuesday the bank sold its GBP5 billion bond, shifting to end investors the risk tied to loans the bank made to small and medium sized U.K. companies. Lambada Financing offered notes in euros, sterling and dollars and priced in line with guidance. According to Moody's Investors Service, the deal securitizes 775 loans made in sterling to 577 companies in Britain, employing a credit default swap to transfer the exposure to the loans to the bond issuer, while the loans actually remain on the bank's balance sheet. The bank announced on Wednesday yet another balance sheet cleansing deal - the GBP4.5 billion RMBS deal dubbed Grace Church Mortgage Funding.
ABN Amro last week announced its 6.75 billion ($7.9 billion) Smile Synthetic SME CLO, backed by loans to Dutch companies. This is ABN's second SME CLO since its 2001 program and offers 6.3 billion in triple-A rated notes, supported by tranches ranging through to double-B ratings.
Another Spanish SME CLO began actively marketing last week with Banco Sabadell's 500 million transaction, GC FTGENCAT Sabadell 1. Backed by financial lease contracts with no residual risk, all of the receivables are from the Catalonia region, with real estate leases making up 66% of the pool. Meanwhile, Portugal added another RMBS to the line-up with Banco Santander Totta's 2.8 billion securitization, Hipototta No. 4. The pool consists of first-ranking and sequentially lower-ranking government-subsidised mortgages and nonsubsidised mortgages. The weighted average LTV on the pool was 72.4%.
"Dealers have been heavily preoccupied with primary markets," said analysts at the Royal Bank of Scotland. "Thus far [last] week, 11.7 billion was priced, pushing November to an all-time record in European ABS issuance. November will easily break June's 40.0 billion barrier, and we count another 37 to 38 billion to be priced between now and year-end."
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