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NIBC sponsors its first Dutch prime RMBS in five years

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NIBC Bank of the Netherlands is marketing its first offering in five years of bonds backed by mortgages it originated for Dutch homeowners.

The €476.2 million Dutch MBS XIX B.V. is collateralized by 2,502 loans with an average balance of €190,327 and weighted average seasoning of 4.09 years. The average loan age is nearly as long a period as the gap between NIBC’s current transaction and its Dutch MBS XVIII deal that closed in February 2013.

NIBC, which has €22 billion assets, is owned by a consortium of investors led by New York investment firm J.C. Flowers & Co. It has just a 1% market share of mortgage origination in the Netherlands and is a much less frequent issuer of mortgage bonds than some of other Dutch prime mortgage lenders like Rabobank, which (through its Obvion affiliate) has sponsored three RMBS transactions this year.

But the credit quality of NIBC's mortgage bonds is comparable to those of other issuers, according to a Moody's Investors Service. The pool of loans for this transaction has a lower weighted average interest rate (3.09%) than other originators, and all the loans are current. Over 85% of the loans have never been delinquent, according to the report report.

The current loan-to-value ratio of the loans is 79.7%, lower than the range of 83.8%-98.4% for loans securitized by Obvion since 2016. More than 41% of the Dutch MBS XIX loans are interest-only loans, which is typical of Dutch prime RMBS deals.

Nearly all the loans (99.2%) are fixed-rate and 32.3% were sold under the Netherlands’ mortgage guarantee program, Nationale Hypotheek Garantie, which provides financial backing to qualified borrowers during hardship periods.

Moody’s expects losses to reach 0.7% of the original principal balance over the life of the transaction; that's also in line with the performance of prime mortgage bonds issued by other Dutch lenders.

Five classes of notes will be issued in the transaction. including a €447.3 million tranche of Class A notes with preliminary triple A ratings from Moody’s and Fitch Ratings.

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RMBS Europe The Netherlands
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