Obvion NV plans to issue 752.2 million ($1.02 billion) of securities backed by Dutch residential mortgages, according to Standard &Poor’s.
The transaction, STORM 2014-II, is managed by the issuer’s parent company, Rabobank International. Obvion has been an originator and servicer of residential mortgage loans in the Netherlands since 1980. In 2012, it became a wholly owned subsidiary of Rabobank Nederland.
S&P assigned preliminary ratings of AAA’ to 700 million of class A notes. The trust will also issue 17.1 million of AA+’ rated, class B notes; 13.1 million of AA-’ rated, class C notes; and 14.5 million of BBB’ rated class D notes. At closing, the trust will issue 7.5 million of unrated, class E notes.
The notes will pay interest at three-month EURIBOR, plus a margin, according to the S&P presale report. The legal final maturity date of the tranches is in March 2051.
The pool if comprised of 9,424 loans granted to 4,286 borrowers. The weighted-average current loan-to-value ratio is 96.72%,
Obvion may use the proceeds from the transaction to purchase further advances or new mortgage loans from the originator until June 22, 2019, up to a maximum limit of 10%. “This could impair the collateral's quality,” S&P stated in its presale report. “However, the transaction documents limit the potential deterioration by ensuring that substitutions can only take place under certain conditions and criteria. “
Construction loans make up 6.23% of the preliminary pool and the issuer can purchase additional construction loans up to June 2019, limited to 7% of the outstanding pool. “In our analysis, construction loans carry a higher foreclosure frequency and loss severity,” the report stated. Rabobank Nederland's has provided a construction deposit guarantee, which covers the entire construction deposit amount, to mitigate risks associated with the loans.