A new U.K. RMBS was announced this week. The deal, which will be rated by Moody's Investors Service and Fitch Ratings, securitizes a pool of prime residential owner-occupied mortgages originated in the U.K. by Principality Building Society (PBS). This is the first residential owner-occupied passthrough RMBS transaction from PBS.
The £686 million ($1.127 million) issue will offer investors two tranches of triple-A rated notes. According to a Fitch presale report, the credit enhancement for the class A, 'AAA' rated notes is expected to be 19.7%, provided by the subordination of class B notes (15.7%) and a non-amortizing reserve fund equal to 4.0% of the initial note balance, which will be fully funded at closing.