Precise Mortgages plans to issue £235 million ($402 million) of securities backed by non-conforming U.K. mortgages, according to a presale report from Standard & Poor’s.

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 transaction, Precise Mortgage Funding No. 1 PLC (PMF1), closed in December 2013.

The capital structure features £85 million of ‘AAA’ notes; £4.26 million of ‘AA’ rated notes; £6.38 million of ‘A’ rated notes; and £2.3 million of ‘BBB+’ rated notes. There is also a tranche of subordinated notes that have not ben rated by S&P.

All of the loans were originated between November 2013 and June 2014.  

Approximately 13.3% of the pool is comprised of subprime borrowers that have previous credit impairments and county court judgments.  The current weighted-average interest rate is 5.06%. “Due to the nonconforming nature of the borrowers, the interest rates on the mortgages are higher than a prime pool, according to the S&P presale report.

Although the majority of loans in the pool (70.89%) are backed by owner occupied properite, 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%.

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