GMAC-RFC Securities is, for the first time in Europe, planning on structuring private placement residential mortgage-backed securitizations. Joseph Smallman, head of GMAC's newly created London-based distribution group, says the decision to create what is known in Europe as bespoke RMBS is part of the natural evolution of the business for developing GMAC's market penetration in Europe.
Privately placed RMBS transactions are uncommon in the U.K. and Europe. "Most U.K. transactions have been cookie-cutter repeat [public] issues of previous deals," notes one RMBS specialist. However, he notes that plain vanilla repeat transactions are beginning to change, using more currencies, for example, because issuers need to show more flexibility with investors. Private placement deals could become a more common feature in the market in the future.
Smallman says deals will be structured to meet investors' needs in terms of size and the amount of risk they want to take. He believes there is a market for privately placed RMBS in Europe, for example, among mezzanine buyers seeking single-A rated tranches, which are often heavily oversubscribed in publicly placed deals. In addition, investors will be more involved in the structuring process as well as having more control over the contents of the asset pool, than it is possible to be in public deals.
GMAC's dedicated European distribution group is roughly two months old. Smallman joined GMAC from Tokyo Mitsubishi International in London where he was a director responsible for securitization syndication and trading. Frank Roessig has also joined from Erste Europaeische Pfandbrief und Kommunalbank where he had been head of structured finance. Darcy Bacon has also come over to GMAC from WestLB, where he was on the ABS sales desk.