European Securitization Market Picks Up with $6.4bn RMBS Issue
An '09 vintage residential mortgage-backed security (RMBS) rated last week rounded out three recent new issuances in the European securitization market. The RMBS notes are backed by mortgages originated by Halifax and by Bank of Scotland, both wholly-owned subsidiaries of HBOS, which itself is a subsidiary of Lloyds Banking Group. The note issuance is valued at £4bn (US$6.4bn) for "modeling purposes," according to a statement by Fitch Ratings. The new issue is one of the first offered on the European securitization market "in some time," according to a statement from the European Securitization Forum (ESF), an affiliate of the Securities Industry and Financial Markets Association (SIFMA). "This initial return to the market by some of the best-recognized names in the European securitization primary market, which follows a recent compression in spreads, is a positive initial step in the right direction” said Rick Watson, managing director and head of the ESF, in a statement Friday. “As recently stated by a number of public institutions, it is important to recognize the many benefits associated with sound securitization.” Credit is also moving in the European automotive and retail sectors with news of new issuance. Days before the Lloyds' issuance, Fitch also assigned expected ratings to a forthcoming securitization of lease receivables originated within Germany by Volkswagen Leasing. The €500m (US$730.7m) portfolio is highly granular, with almost 38,000 leases, although the rating agency noted the recession will likely fuel higher delinquency and default levels in coming quarters. Late last week, Fitch also issued a final rating to class A notes from Tesco Property Finance 2. The transaction, a securitization of rental income on 15 retail stores and two UK distribution centers, bears a final initial loan-to-value (LTV) ratio of 109.7%, the rating agency said. These deals are another indication of life perhaps returning to the European securities market, according to the ESF's director Marco Angheben. “This is a positive sign for a market which will contribute to the return of the European economy,” Angheben added in the statement Friday. Write to Diana Golobay.