Seemingly, everyone wants an STS stamp. Three issuers are getting one for the first time this week.
Tom Hall’s main story last week focused on Rothesay’s refinancing of the huge HSBC portfolio it bought last year. Rothesay specially selected the securitized portfolio to qualify for the STS label. That is unsurprising, given that the UK-based pension insurance specialist is working with a pool of prime mortgages where buyers will expect the stamp.
What is more exciting is that two regular issuers are set to print their first transactions with STS stamps this week.
Mortgage lender Paratus AMC has significantly rearranged its financing set-up since Apollo bought it in 2022. In early 2024, it consolidated its warehouse funding into one vehicle, Orion Funding No. 1, to fund owner-occupied and buy-to-let lending.
Later that year, Paratus brought out a new shelf in the public markets — Braccan Mortgage Funding — combining the two types of mortgage into one deal. Previously, it had separate shelves — Twin Bridges for buy-to-let and Brants Bridge for owner-occupied.
But now, Twin Bridges is back and with an STS stamp for the first time.
Until recently, Shawbrook Bank was the only issuer of UK buy-to-let STS paper. But since December 2024, OneSavings Bank, LendCo, Chetwood Bank and now Paratus have all issued STS buy-to-let deals.
UK challenger banks are important buyers of buy-to-let RMBS. Having an STS stamp encourages that bid.
“When we’re holding the triple-A, the STS is really useful, and it’s the same for other small bank treasuries who invest in the triple-A,” said Chetwood treasurer Sam Hale after its deal last year.
It’s not just mortgage issuers going down the STS route. Haydock, another Apollo owned business leasing firm, is adding STS to its Hermitage shelf.
The firm is following in the footsteps of Propel, which had an STS stamp on its debut issuance earlier this year. Propel’s Ian Wills appeared on Another Fine Mezz in April to discuss that deal.
“STS for us felt like the right thing to do in terms of badge of quality, more than because we thought it would drive demand,” he said. “We ended up with about a third of the class A being bank investors, so I'm sure that would have been of interest to them.
“[It’s hard to say] whether they would have invested with or without that. I think probably we would have seen similar demand. We do hope that it helps those investors with the secondary liquidity. I think that probably is where it comes in and has more value for the investors.”
