UK Charter Court Financial Plans £484.5M ‘Buy-to-Let’ RMBS

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Charter Court Financial Services is planning a £484.5 million securitization of U.K. investor-owned residential mortgages.

Precise Mortgage Funding 2017-1B PLC will issue six classes of notes. The Class A tranche is rated triple-A by Moody’s Investors Service and will total 84% of the finalized collateral pool with credit enhancement of 16%.

The transaction will include a reserve fund of 2% funded with proceeds from sale of the Class Z notes making up 1.6% of the transaction.

The notes are backed by "buy-to-let" loans to 1,656 prime borrowers. These loans were originated in 2016 and 2017 and are all making timely payments.

This is the second buy-to-let transaction Moody’s has rated for Charter Court, which does business as Precis Mortgages. It is also the third "buy-to-let" transaction in Europe in the last week, and the fourth since February.

Moody’s said the deal’s credit rating is strengthened by a combination of high-yielding assets with considerable excess spread. Over 95% of the loans are interest only, and 57% have floating rate notes tied to three-month Libor. The remaining 43% are fixed-rate loans that will be converting to three-month Libor floating rates.

The transaction was arranged by Lloyds Bank.

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