RMBS can fund where covered cannot
The UK’s Skipton Building Society tapped into unrelenting sterling demand for UK prime RMBS and built a heavily oversubscribed book for £450m of the senior notes of Darrowby No 2. Though the borrower has a £5bn covered bond programme, it has only ever been used for emergency central bank funding. Its second RMBS deal pays testimony to the fact that securitisation is better for funding weaker banks than covered bonds. Meanwhile, Santander eschewed the covered bond market for an RMBS deal announced on Wednesday.
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