The Chancellor of the Exchequer Alistair Darling announced today that Northern Rock will be nationalized within the next few days following weak bids for a private sector buyout. Darling rejected buy-out proposals from Northern Rock's board and Virgin Group because the bids didn't ensure that taxpayer loans to the mortgage lender would be repaid quickly enough. Northern Rock shares are to be suspended immediately. Securitization analysts said it is yet unclear how this next move in the Northern Rock saga will affect the future of its master trust Granite. Deutsche Bank analysts added that over the short-term, government ownership should not negatively impact the rating. This removes any risk of an early wind-up of the trust or of an insolvency. "We believe nationalization offers no new information on Granite's likely fate," said Societe Generale analysts. "We remain of the view that the next two years will see the trust continue as a competitive funding tool. After that, the state of Northern Rock and the securitization market will determine if the trust is allowed to enter a run-off scenario or if it will be able to continue by issuing new notes." According to Deutsche Bank, the government has given specific protection to keep the Granite master trust operating as usual, probably wanting to keep the trust operating for future funding potential. "For the time-being however, the government has cheaper sources of funding available to it, so it is unlikely to access the securitization markets," Deutsche Bank analysts said.
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Spreads ranging from 16-18 basis points over the three-month, interpolated yield curve on the P1 (Moody's) and F1+ (Fitch) notes, to 160 to 170 over the benchmark on the class D notes.
April 25 -
Mortgage rates rose 7 basis points this week, Freddie Mac said, and more increases are likely following a weaker than expected gross domestic product report.
April 25 -
Broken down by product type, the agency's NJCLASS Standard Fixed product should account for a large majority of the loans, 75.4%. NJCLASS Consolidation will account for the next-largest group, 14.1%.
April 24 -
Congressional Review Act resolutions are ramping up ahead of the 2024 election cycle. Experts say that, although none are likely to become law, the resolutions are still powerful messaging and political tools.
April 24 -
The notes will price against Treasurys, with spreads expected to fall between 85 and 90 basis points over the benchmark.
April 24 -
The JPMorgan Chase CEO took aim Tuesday at the proposed Basel III endgame rules, hindrances to mergers and bureaucratic burdens. "I would love to have a more productive relationship with regulators, but I think it takes conversation," Dimon said.
April 24