Banc of America Securities is readying its fourth synthetic securitization of residential mortgages in just 12 months, which would mean it had securitized in the region of USD50 billion of its parent's RMBS portfolio. In addition, these are thought to be the only synthetic RMBS deals to have hit the market in the U.S.
The deals, dubbed RESI (Real Estate Synthetic Investments), are primarily balance-sheet driven, but investor appetite is also a main driver, according to a BofA official. An observer added that apart from the rarity of seeing one deal being repeated as frequently in such a short space of time, its surprising that there have not as yet been any copy-cat deals. CDO professionals said BofA is in a unique position to structure these deals because it has a huge mortgage franchise and CDO structuring capabilities. Other firms will likely have to earn third-party mandates which will involve educating clients. BofA also plans to replicate these deals with third parties, according to the official.
The original CDO, which the new deal is expected to replicate, referenced a USD12 billion portfolio of Bank of America residential mortgages (DW, 12/16). In the CDO the firm issued nine tranches ranging from B minus to single A, totaling USD138 million. It kept the super-senior tranches.
