RBS RMBS sparks European securitization
The largest asset class in the European asset-backed securitization market, UK RMBS, brought signs of life to the space with the Royal Bank of Scotland announcing it resuscitated its master trust series -- Arran Mortgage Funding. The 2010 series of $7.2 billion U.K. prime RMBS originated by RBS and NatWest Homeloans is the first since 2007 for the bank and the largest since the crisis began. However, specific information is restricted. The issuer cited Securities and Exchange Commission restrictions under Rule 144, meaning the deal is limited to very large European institutional investors and cannot be marketed in the U.S. nor held by Americans. The underlying mortgage collateral likely originated in the years since the last deal in 2007, and though RBS spokeswomen Claire Gorman wouldn't confirm as much, she did say "conservative underwriting standards" occurred in the origination process. RBS represented 12% of the U.K. mortgage market in 2009. JPMorgan Chase and Lloyds TSB are co-managing the deal. This issue is getting out ahead of two more European RMBS deals, including one that is being placed in the pipeline as early as today, sources tell HousingWire. "The current pipeline has increased significantly, dominated by U.K. and Dutch RMBS," said Jean-David Cirotteau, a credit strategist at investment bank Société Générale. "Mandates are piling up." Dutch insurance giant Aegon plans to bring about a $1.3 billion of prime RMBS through Saecure BV 9 soon. But terms of the second deal -- estimated at roughly $900 million to $1.17 billion -- are confidential. Traders report pricing for higher-rated tranches estimate at around 130 basis points over LIBOR, which they say is a good sign for market revival. "Prices are a little too high for this to be a phenomenon," said one trader analyzing the markets. "It will take some time to adjust after so many years of such small margins." Write to Jacob Gaffney.