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Deals including some commercial mortgages expected to follow
Deal was priced 6bp tighter than most recent iteration of the asset class
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There were more calls this week for the UK government to support non-bank lenders that are unable to access the Term Funding Scheme, with market participants preferring a simple extension rather than alternative funding options. -
The Financial Conduct Authority (FCA) has ruled out granting a reprieve to the Libor benchmark, leaving the UK RMBS market to face transitioning legacy deals before the end of the year. That means that lenders will be grappling with the shift at the same time as borrowers will come to the end of Covid-19 payment moratoriums.
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Finance lobby group UK Finance said that most borrowers on mortgage moratoriums could afford to resume full payments after three months, and an extended moratorium would not be in customers' best interests.
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The UK’s Financial Conduct Authority (FCA) has encouraged banks not to record mortgage loans with payment moratoriums as being in default, delaying default related triggers designed to protect noteholders and causing concerns around RMBS deal performance.
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The UK chancellor has doubled the mortgage moratorium period to six months, but has not allowed mortgage lenders more discretion when deciding to grant payment holidays on their mortgages. This is making RMBS performance difficult to assess, market participants say.
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European securitization bids wanted in competition (BWIC) volume has already reached €4.6bn in 2020, the highest level since JP Morgan's research team began collecting BWIC data in 2016. The secondary market is rallying following an improved equity market and a reopened European primary.
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Levels on offer in the public securitization markets didn’t hit Pimco’s targets for class B notes in its new Irish RMBS, Fingal Securities, while placement of the class 'A' notes lent heavily on a group of pre-sounded accounts to derisk the deal's execution.
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New ABS contracts are being written to exclude pandemics from the scope of ‘force majeure’ clauses, inserted to allow servicers to step away from their commitments if events outside of their control – such as the outbreak of Covid-19 – stop them from servicing portfolios.
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Barclays is leading the race to reopen the European RMBS market with an €807m Irish deal, Fingal Securities, a piece of the 'Project Porto' portfolio it bought from Bank of Scotland in 2018, with joint leads BNP Paribas and Bank of America joining sole arranger Barclays to help price the deal.
