Kensington Mortgage Co. (KMC) is pooling approximately £343.7 million (US$428.7) in prime-borrower first-lien and “buy-to-let” investor mortgages in the second UK mortgage-backed securitization being marketed this month.

Finsbury Square 2017-1 is a four-class series note structure backed by 2,320 loans secured by residential properties with an average balance of £148,160 and a weighted average interest rate of 4.45% (the highest of any recent KMC securitization).

Nearly 84% are new loans originated between June and November 2016; the remainder in the provisional portfolio are older loans that were from an original 2012 securitization of Kensington loans (Gemgarto 2012-1 Plc).

The size of the note issuance and the individual tranches are to be determined, but 86% of the transaction will be in the Class A series that has a provisional ‘Aaa’ rating from Moody’s Investors Service. The Class A notes are supported by 16% credit enhancement.

The three additional series of rated floating-rate notes (Classes B, C, and D) will accompany two series of Class X and Class Z interest and principal notes not supported by the loans and to be paid with remaining excess spread. Moody’s notes the transaction is supplied with “significant levels” of excess spread.

About 15.2% of the transaction consists of buy-to-let investor loans.

The weighted average loan-to-value ratio of the loans is 72.21%, and only 1.76% of the loans have ever been in arrears, according to Moody’s.

With this transaction, its fifth overall securitization, KMC will have over 95% of its assets securitized.

Merrill Lynch, Citigroup and Mitsubishi UFG Securities are joint lead managers on the transaction.

Finsbury was rated by Moody’s just two days after the ratings agency gave provisional grades to the Stanlington No.1 plc nonconforming UK mortgage loan securitization that pooled loans with a balance of £233 million.

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