Expectations of renewed activity in the UK Residential
Mortgage-Backed Securities ("RMBS") market have been
fulfilled, with a bumper first half of 2024, characterised by a
return of bank-led deals, as a succession of well received and
upsized RMBS transactions ignited the market, following a
multi-year lull. Issuers have moved to take advantage of the
positive market conditions, with a flurry of new deals.
Also driving the market is the expiry of the Bank of England's
Term Funding Scheme (TFS), which has meant that liabilities of
lenders under TFS now need to be refinanced with private capital,
ending an era of ample government support which has prevailed in
one form or another since the global financial crisis over 15 years
ago.
RMBS master trust issuance from stalwarts Santander's Holmes and Lloyds Permanent at the start of 2024, ensured the UK market began the year on the front foot With significantly improved market conditions, expectations have turned to the prospects of greater numbers of debut issuers stepping forward. Within prime RMBS this year, the Maples Group acted as corporate services provider on Albion No. 6 Plc, a £350 million RMBS for Leeds Building Society. Additionally, the Maples Groupacted on Friary No. 9 Plc, a £650 million RMBS for Principality Building Society. Some UK banks have also been active in significant risk transfer (SRT) securitisations this year in order to gain balance sheet relief and improve capital ratios, which are expected to further deepen public securitisation markets.
Drivers for RMBS to Continue
More certainty over pricing and the trajectory of base rates have encouraged banks back to the RMBS arena, and with the competitive nature of the UK mortgage market, the ability of the smaller banks and building societies to secure lower cost funding through securitisation will be key towards efforts to compete with the majors. Numerous non-bank lenders have also entered the UK mortgage market in recent years. utilising new technology as banks became more risk averse, resulting in a more diverse and competitive lending environment. The incoming Labour government in the UK has also outlined plans to encourage home ownership, including a mortgage guarantee scheme for first time buyers and changes to planning regulations to boost homebuilding
The current window of opportunity in the RMBS market has therefore been both attractive for challenger banks, building societies and non-bank lenders and provides a further reinforcement of the pivotal role that securitisation plays in overall economic growth. From an investor perspective, 2024 has seen a compression of yields in the corporate loan market, which has brought Collateralised loan obligations ("CLO") yields down somewhat Asset-backed securities (ABS) and RMBS offer an interesting alternative, on a risk adjusted basis.
The Maples Group-UK RMBS and Securitisation
The Maples Group has extensive experience across all parts of the UK securitisation market. We have a long history of working with leading arrangers and law firms, assisting clients develop and maintain RMBS issuance platforms. Our lawyers and fiduciary professionals also have first-hand experience in the development of UK capital markets, including working through the impact of regulatory changes, the global financial crisis, and transactional challenges faced by RMBS structures. Our teams have a sophisticated depth of market knowledge, having worked on groundbreaking and innovative securitisation structures with many of the industry's leading participants
From a fiduciary perspective, the Maples Group provides UK resident directors to structured finance vehicles, who are leaders in their field, with vast experience in investment management, capital markets as well as the legal and accounting sectors. As theregulatory landscape continues to evolve in the securitisation sector, the demands on the technical proficiency and capability of directors to these vehicles has risen significantly. Supported by the institutional infrastructure of our global network of 16 offices. including all the key securitisation jurisdictions, our fiduciary team have experience replacing incumbent corporate service providers, and building a long-term relationship with our clients on repeat deals. Clients also value our efficient, responsive service and our ability to understand the unique requirements of each transaction that we service.
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