U.K. lenders, Paragon Mortgages and Precise Mortgages priced over £500 million ($854 million) of senior securities backed by residential mortgages last week.
Paragon Mortgages priced £319 million of senior securities backed by portfolio of buy-to-let mortgages. Moody's Investors Service assigned the notes issued by Paragon Mortgages (No. 20) a preliminary rating of Aaa’. The notes structured with a weighted average life of 3.3-years priced at 68 basis points over three-month Libor, according to Standard & Poor’s.
The structure allows for additional loans to be added to the pool before Oct. 31, 2014. According to the Moody’s presale report, prefunding will equal 18.6% of the pool. That is greater than the prefunded portion of Paragon's previous deal, completed in February, which allowed up to 5.3% of the mortgage loans to be added to pool after it was closed.
Another 32.4% of the loans included in the deal were repurchased from one of the issuer’s previous deal, Paragon Mortgages No. 16.
Llyods Bank, Macquarie Bank (London Branch) and Morgan Stanley are joint lead managers on the deal.
Precise Mortgages priced the 3.7-year, £200 million senior tranche of its RMBS, Precise Mortgage Funding 2014-1, at 80 basis points over three month Libor, according to S&P.
The securities are backed by non-conforming U.K. mortgages, according to a S&P presale report.
Precise Mortgage Funding 2014-1 is the second ever deal in which Charter Court Financial Services Ltd., under its trading name of Precise Mortgages, has originated all of the loans. The first such transaction, Precise Mortgage Funding No. 1 PLC (PMF1), closed in December 2013.
Approximately 13.3% of the pool backing the latest deal is comprised of subprime borrowers that have previous credit impairments and county court judgments. The current weighted-average interest rate is 5.06%.
Although the majority of loans in the pool (70.89%) are backed by owner occupied properties, a 29.11% portion of the pool is comprised of buy-to-let mortgage loans. The weighted-average current loan-to-value ratio is 72.53%.
