The Dutch State Treasury Agency is bringing more residential mortgage bonds from the ING Group (ING) to the U.S. market.
Only last month, the announced liquidation of $5.1 billion from the ING Illiquid Assets Back-up Facility sent the mortgage bond market into a frenzy.
The DSTA still has $6.5 billion to sell. Originally it was expected to be sold throughout the year. The next deal is coming quick on the heels of the last, less than a month later.
However, according to structured finance analytics firm Interactive Data, the collateral type may play a role in heavy investor interest as the current auctions contain better performing securities.
"The composition of the first public auction was heavily weighted toward Pay Option ARM paper, with this segment accounting for nearly half of all holdings based on current face balance," said the firm in its daily market insight report. "The remaining portfolio experienced a meaningful shift toward fixed-rate collateral, with more than 50% now in this subsector, up from only 37% previously."
It is not clear if this auction will be for all of the remaining collateral or for part.
The Dutch state said it would continue the competitive auction process to sell the non-agency residential mortgage-backed securities underlying the ING Illiquid Assets Back-up Facility.
"The decision of the Dutch state to continue with the sale of the portfolio is based on the continued improvement in the U.S. housing market and a high level of interest by investors for non-agency RMBS securities," said the DSTA in a statement. "While the DSTA expects, as indicated earlier, that it will be able to divest the assets within a period of 12 months, there will be no fixed deadline for completion of the sale of the portfolio."
The DSTA added that only reverse inquiries, where the investor must declare level of interest, at least $2.5 billion in size will be accepted via BlackRock Solutions.
The Dutch state will then put together a short list of broker-dealers to compete for the paper.
ING is a Dutch investment firm and insurer. It received a bailout from the Netherlands and is liquidating all non-core, non-insurance assets as part of the conservatorship.
The ING Illiquid Assets Back-up Facility is the primary holder of the U.S. RMBS investment of the one-time big market player.