Full stack sales block payment holiday fixes

By Tom Brown
30 Nov 2020

Securitization originators who sell their full capital structures hoping to deconsolidate assets could struggle to protect their deals from Covid-19 payment holidays, as targeted repurchases or liquidity support risks regulators treating deals as though they are still on balance sheet.

Major bank issuers have done their best to insulate RMBS investors from the credit effects of the pandemic. Lloyds, for example, poured additional liquidity into its credit card master trust, Penarth, while Santander said it would divert interest payments from the seller’s share in Holmes, a mortgage master trust, ...

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