The April holidays led to less-than-impressive European primary issuance. Year-to-date issuance is up only 4% over the same period last year. According to analysts at the Royal Bank of Scotland, total issuance for April this year was at 13.0 billion ($16.3 billion) compared to 31.8 billion in April 2005. But despite the seemingly slow pace, analysts at Commerzbank reported that the market in 2006 is still on par with last year's. A new wave of Jumbo RMBS deals are set to come to market, which should drive this year's volumes upward.
Standard Life Bank issued guidance on its new GBP1 billion ($1.8 billion) U.K. RMBS issue from its Lothian series. The deal's, Lothian 2006-1, structure offers notes rated from triple-A to double-B including three senior tranches issued in dollar, euro and sterling denominations. The dollar piece dated at 0.8-years is talked between negative two to negative three basis points over Libor, the 4.5-year euro tranche is talked at the nine basis point area over Euribor and the sterling 5.2-year piece is talked between nine and 10 basis points over Libor.
Northern Rock began marketing its new Granite deal, the GBP3.0 billion Granite 2006-2. The transaction offers six senior tranches that include 0.9-year notes denominated in dollars, euros and sterling. The capital structure also includes a 3.0-year dated dollar tranche, 5.0-year euro piece and a 7.2-year sterling note. Granite's subordinated tranches were offered as 1.9-year dollar denominated notes rated double-A and single-A; and a 5.2-year double-A, single-A and triple-B rated notes were offered in all three currencies.
The U.K. market looks set to receive a further boost by newcomer Lloyds TSB. The company announced that it was looking to move from a buy-and-hold model toward an origination and distribution framework in order to improve its balance sheet management. To complete its business model transition, the U.K. bank is planning a new securitization program - which is expected to take the form of a master trust - scheduled for launch in the second half of the year. HSBC made a similar announcement at the end of last year, saying it also intends to use securitization to finance consumer and mortgage assets at some point in 2006.
Spanish mortgages
On the Spanish RMBS side, the market continues to heat up. Rural Hipotecario VIII is expected to begin marketing this week. At press time, the total deal size was expected to be 1.2 billion. Dealers began work on Atlante Finance, a 1.36 billion mixed-MBS and ABS deal for Unipol Banca. The collateral is split into prime residential, commercial, SME loans and loans made to public local entities. Atlante's pool has a 60% LTV, 12 months seasoning and includes 98.6% first lien loans. A total of 1.2 billion of triple-A rate notes are offered with a 5.2-year average life and 16.5% of credit enhancement provided by 28.8 million of 8.7-year single-A rated notes and 136.8 million of triple-B rated notes.
Underwriters priced UCI 15, a 1.45 billion Spanish RMBS for UCI. The triple-A rated notes offered with a 4.8-year average life priced at 14 basis points over Euribor. The pool included 23% of bridging loans - given to borrowers for purchasing a new home without selling their current residence - 5.4% unsecured and 0.5% second lien loans. The unsecured and second lien loans were offered to borrowers with first lien mortgages within the pool.
Other deals
Marketing began for Obvion's 1.5 billion Dutch RMBS deal, Storm 2006-II. The structure is similar to its last transaction priced in February this year, offering 200 million of fast-pay 1.1-year senior notes and 1.236 billion of 6.2-year notes alongside four junior tranches.
On the U.K. CMBS front, a new GBP135 million deal for ING Real Estate began marketing. The deal is backed by an office complex located on Fleet Street, London tenanted by Goldman Sachs. It offers two six-year tranches sized at GBP100 million and GBP35 million. The senior notes are triple-A rated by Moody's Investors Service and Standard & Poor's, while the Class Bs are rated Aa2'/'AAA' for equivalent 32.4% and 43.7% LTVs.
BNP Paribas began marketing Global Liberte IV, its 9 billion synthetic balance sheet CLO. The deal references 420 assets, with an average triple-B rating.
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