Investec is in the market with a U.K. RMBS deal worth ₤186 million ($295.26). Barclays Capital and Investec Bank are managing the eight-tranche transaction called Residential Mortgage Securities 25 (RMS 25).
According to a Standard & Poor’s pre-sale report, some of the note tranches in the deal have features that are not quite typical for a U.K. RMBS deal.
Wholly-owned unit of Investec KMC is acting as mortgage administrator for all the loans in the offering. However, it sub-delegates the servicing function to Homeloan Management (HML). KMC is still the special servicer for the collateral pool.
Meanwhile, S&P said that HML is a wholly-owned subsidiary of Skipton Building Society and ranked ABOVE AVERAGE as a primary mortgage servicer. The rating agency does not rank KMC’s servicing function.
RMS 25 will be the 24th deal to have the RMS epithet. Additionally, KMC originated Kensington Mortgage Securities 2007-1 and deals that fall under the Money Partners Securities banner, S&P analysts reported. Investec also acted as seller in the Landmark Mortgage Securities offerings.
The collateral pool comprises mostly U.K. nonconforming residential and buy-to-let mortgage loans that were originated in or before 2008, according to the S&P presale. Additionally, a proportion of the pool (about 6%) has been recently originated by KMC.
After funding of a liquidity reserve fund to its target amount or 3.75% of the class A note's balance of, S&P analysts expect principal receipts to be paid sequentially to the noteholders at first, with the class A notes redeemed prior to the subordinated classes.
However, redemption of the notes might happen on a pro rata basis if certain conditions are met, S&P said. The liquidity reserve fund will amortize in line with the class A notes.
Meanwhile, according to the rating agency, the class M1, M2, B1, B2, and B3 notes — the mezzanine notes — are expected to be deferrable-interest securities. The interest rate on the class A2 and mezzanine notes will be subject to a cap of 5% and a floor of 0%. Within these parameters, analysts think that interest payments on the class A2 and mezzanine notes will be based on the lower of the Bank of England Base Rate (BBR) plus 25 basis points, and three-month sterling Libor.
The deal will have no swap. According to analysts, partly mitigating this feature will be that the issuer will enter into two interest rate cap agreements as well a differential cap agreement at close. It is not expected that the margins on the RMS 25 notes will step up in the future. As an alternative, a "synthetic" step-up date for the class A1 noteholders will be created. At the closing date, the issuer is expected to buy a gilt-strip which will mature on or about the optional redemption date. Proceeds from the security will be distributed to the class A1 noteholders if the A1 notes have not redeemed in full at this time, according to S&P.
Australian RMBS deal
Another foreign RMBS transaction is from ING Bank’s Australian unit. The subsidiary has launched a A$500 million RMBS offering called Idol Trust Series 2010-1 and should price by the middle of this month. Macquarie Bank and Westpac Institutional Bank are joint leads on the offering.
The transaction is backed by Australian prime RMBS, according to a Moody's Investor Service presale report. The portfolio comprises mortgage loans secured by residential properties. All the loans are covered by Lenders Mortgage Insurance (LMI) policies that insure losses equal to 100% of the principal amount, the accrued interest of each loan and reasonable expenses involved in enforcing the mortgage, the Moody's presale report said.
Other deals from foreign issuers in the pike include PYMECAT 3 FTPYME, Fondo de Titulización de Activos, and Royal Street N.V.-S.A. Compartment RS-2, according to the ASR Scorecards database.
Meanwhile, on the domestric front, Navistar Financial Corp. is in the market with a truck-backed transaction. The $290.1 million deal is managed by JPMorgan Securities.
Preliminary details on the RMS and Navistar deals are available via the link below from the ASR Scorecards database.
