NCUA completes another round of RMBS
The National Credit Union Administration is nearly two-thirds of the way to its goal of resecuritizing the distressed assets of 27 failed credit unions following the successful completion of its latest offering. The deal closed on Jan. 18 and will settle either Thursday or Friday, according to Larry Fazio, NCUA deputy executive director and architect of the securitization platforms. The latest deal is one class worth $1.5 billion of resecuritized residential mortgage-backed securities. Moody's Investors Service and Standard & Poor's both rated the deal, which carries the full faith of the United States government, triple-A. This deal, like the others, is led solely by Barclays Capital. In total, the NCUA plans to securitize $50 billion in unpaid principal balance, raising up to $35 billion in market proceeds. This deal puts the NCUA at $20 billion. The issue was oversubscribed six-fold and priced 45 basis points above one month Libor. The collateral is a mixed bag, quality wise of residential mortgage, though esoteric loans, such as subprime never reach above 2% of credit union origination during the housing bubble. The notes carry a weighted average life of 4.39 years and will mature in nine years. Despite the wrap, Fazio said the deal is overcollateralized to minimize the risk of drawing from the government guarantee. "We design it to have overcollateralization so that we weren't issuing a type of unsecured debt into the market," Fazio said. Fazio added that despite strong investor support, the foray into securitization as a financing method will end this year. "Our hope is that it's our first and last issuances of securitizations," he said. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.