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Investments / The Ticker

Redwood inks another RMBS

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Redwood Trust sold its second round of private-label residential mortgage-backed securities this year. The Mill Valley, Calif., real estate investor sold $163.6 million worth of bonds, likely backed by jumbo mortgages, with a top-rated portion to yield 1.8 percentage points more than benchmark swap rates, according to a report in Bloomberg.

Redwood remains the only real player in private-label mortgage bond issuance, as the market continues to struggle to revive.

The article states the credit enhancement, or protection against default for investors, on the top-rated portion of the Redwood deal fell to 7.2% from 8.3% in the January offering, according to reports from Fitch Ratings. That change, and tighter spreads, potentially increases the returns to the lowest-ranked slices.

The mortgages are likely low loan-to-value deals to high-credit borrowers. Kroll Bond Rating Agency is also said to have rated the credit risk of the deal.

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