Paragon Preps £154.5M U.K. Buy-to-Let RMBS

Register now

Paragon, a U.K. buy-to-let mortgage lender, plans to securitize a £154.5 million ($232 million) pool of mortgage loans, according to a Moody’s Investor Service presale report.

Lloyds Bank, Macquarie Bank, Morgan Stanley and Natixis are the lead managers.

Paragon Mortgages No.22, the issuer’s first deal in 2015, will pool loans with a weighted average remaining term of 21 years; all of the loans pay only on interest for part of their terms. Only prime borrowers with low amounts of leverage, are included in the pool. The loans have an original loan-to-value ratio of 72.1% and none are subject to any bankruptcy ,individual voluntary arrangement or county court judgments.

A unique feature of the deal, when compared to prior Paragon transactions, is that the structure allows additional loans to be added to the pool on or before August 31, 2015.  According to Moody’s, up to £66 million of loans can be added by the August deadline.

Paragon has securitized 84% of its mortgage loans via 27 previous transactions. Collateral performance of the issuer’s deal has been consistently better than the buy-to-let sector average, according to Moody’s.

In February 2013 Moody’s confirmed the ‘Aaa’ ratings of the senior notes in eight Paragon mortgage transactions following the addition of a back-up servicer facilitator and the addition of estimation language to ensure continuity of payments in case of servicer disruption.

 At the same time, Moody’s downgraded the Class A notes to ‘Aa3’, Class B notes to ‘A1’ and Class C notes to ‘A3’ in Paragon Mortgages No. 14 due to limited credit enhancement and the transaction being excluded from the restructuring process.

Moody’s expects to assign ‘Aaa’ ratings to the class A notes, ‘Aa2’ rating to the class B notes, ‘A2’ ratings to the class C notes issued via Paragon Mortgages No. 22.

For reprint and licensing requests for this article, click here.