Bradford & Bingley, one of the U.K.'s largest mortgage lenders, is readying a term securitization program, which it plans to launch in the fourth quarter next year. Peter Green, director of treasury and balance sheet management, says securitization will be the firm's primary source of funding going forward, because the strength of its collateral provides for efficient secured funding. Bradford & Bingley has completed one £1 billion securitization of residential mortgages to date.
To start, the firm will do a £1 billion warehouse deal of prime buy-to-let mortgages, which Green says have been performing four times better than traditional ones. Buy-to-let mortgages are for customers seeking a loan on a property they intend to rent out to tenants. The warehouse deal is being done in the first quarter as a stop-gap measure until the proper back-office systems are in place to complete a term deal.
The firm is also planning to establish a master trust, after which it will issue one or two £1 billion deals per year. Bradford & Bingley will securitize buy-to-let mortgages and perhaps some traditional mortgages as well, says Green. The firm's residential mortgage book is roughly £16 billion. The firm has tapped HSBC Bank to lead the warehouse deal and HSBC and Credit Suisse First Boston for the term deal.