Shawbrook Bank announced on Friday that it would retain an RMBS deal called Ealbrook Mortgage Funding 2022-1 after it became clear its spread ambitions could not be met. However, leads did announce guidance on a UK credit card ABS, bringing some hope.
The UK RMBS was secured on mortgages originated by Bluestone Mortgages and sold by Shawbrook Bank. Barclays and Bank of America were appointed joint arrangers for the deal and were also lead managers, alongside BNP Paribas.
A banker on the deal said the decision to retain the deal was “a function of where the market is right now”. Although all seven tranches were retained, a spread was assigned to all of them, with the 2.6 year senior piece, that was rated Aaa/AAA/—, advertised at 120bp.
This was “well inside the secondary market, so the issuer opted to retain the deal for now,” said the same person, who suggested secondary market levels were in the region of 30bp wider at 150bp for the senior class notes.
Bankers say a lot of issuers are weighing whether to issue a publicly syndicated deal, a pre placed deal or retain bonds and maintain flexibility to sell them if the market moves in their favour.
PCL gets big anchor order
On Tuesday, joint lead managers, Bank of America, Lloyds, RBC and Société Générale announced initial priced thoughts for an insurance premium finance receivable ABS called PCL 2022-1 with the class As being marketed at 140bp.
Bankers on the deal said that 50% had been sold on basis of reverse enquiry and this had helped give the confidence to go public.
Bankers in the ABS community have at least been able to console themselves with the fact that deals are being pulled in the much more liquid and larger SSA market. On Tuesday Sagerss opted to postpone a €500m seven year which was being marketed at 45bp over OATs.
“Even if you price a deal in right way at attractive levels you are coming up against a UK asset manager community that remains very limited in their ability to drive trades,” said a banker on the UK insurance premium ABS deal.
He said that large UK asset managers had been big buyers in the past but could no longer be relied on to post anchor orders and get trades off the ground.
Even so, the same person was confident supply was likely to emerge in the next two weeks ahead of July 14, noting that a few sterling and euro deals had been “sounded away from us”.
However, demand for these deals is likely to be overly reliant on bank buyers, he warned.
In the sterling market buy to let and non conforming RMBS from specialist non bank lenders is expected to surface as these issuers are considered "more willing to pay something to get a deal done,” said the same person.
He said that waiting to September was not necessarily a wise option as, even if macro-economic pressures were to improve, a flood of issuance could be expected to pressure spreads.
A swathe of auto deals would have normally been expected around this time of year but wide spread levels meant “the economics don’t work,” he said.
He felt some issuers with decent warehouse availability had flexibility to wait, but warned that they would not “want to head into year end with limited warehouse capacity having missed an opportunity to sell a pre-placed or publicly placed deal".
