© 2020 Arizent. All rights reserved.

Santander UK's next prime RMBS set for USD-only issuance

Register now

Santander UK’s 27th securitization from its prime UK residential mortgage portfolio will bypass the local currency to issue its latest series entirely in U.S. dollar-denominated notes.

According to a presale report from Moody’s Investors Service, the Holmes Master Issuer plc 2018-2 will include two new Series A1 and A2 bond tranches with sizes to be determined. The A1 tranche will be a one-year money-market series with a preliminary P-1 rating from Moody’s, while the triple-A-rated A2 notes will be term notes with a final legal maturity of 2054.

The bonds will be backed by a pool of 51,791 loans that were mostly issued between 2006 and 2008, with a collective outstanding balance of £5.2 billion (US$6.7 billion). All the mortgages were originated by the predecessor institution of Santander UK, Abbey National plc, a building society that was acquired by Banco Santander in 2005 and later merged with Bradford & Bingley to form Santander UK.

Previous deals have commonly issued multicurrency note tranches in pound-sterling and U.S. dollar denominations, including Santander’s 2018-1 series in March that totaled an equivalent of £985 million, backed by loans totaling £4.5 billion.

The last single-currency issue from the trust was a £500 million series issue in 2017, absent of U.S. dollar notes.

The deal is the second issuance this year from the master trust, following Santander’s 2018-1 series that totaled an equivalent £985 million capital structure featuring multicurrency notes in both pound-sterling and U.S. dollar denominations. That transaction was backed by loans totaling £4.5 billion.

A slight majority of the loans (51.4%) in the new 2018-2 series were advanced on an interest-only basis, building a collateral pool with a weighted average loan-to-value ratio of 60.6% — a lower mark than the average 64% in other UK prime RMBS master trusts, according to Moody’s.

The average interest rate of 2.48% are from a blend of fixed-rate, standard variable-rate and tracker rates (which commonly follows the Bank of England’s base rate).

For reprint and licensing requests for this article, click here.
RMBS Santander Europe
MORE FROM ASSET SECURITIZATION REPORT