JP Morgan will be managers of the deal and the prime UK assets will be sold by Silverstone 2009-1, a vehicle specifically set up to issue securities backed by UK mortgages.
A banker at Citi working onthe deal, who wished to remain anonymous, said the securitisation
will launch following roadshows which occurred last week. He explained that the building
society decided to enter the market after the success of last month’s Lloyds Banking Group’s (LBG) £4bn deal in September, which was more than twice oversubscribed, as investors
bought bonds backed by AAArated prime UK residential mortgages.
He added: “Investors want to put their money into residential mortgage backed securities which is a massive sign of confidence in the market. This market was dead not too long ago and
we know there are a couple of deals planned which proves the market is reopening.”
Danny Clarke, equity analyst at Shore Capital, said it believed securitisation would return as a dependable source of finance if the Nationwide deal proved successful.
He added: “If securitisation is supported by strong prime mortgages, it will be a viable
long-term source of funds and will supplement standard deposit based finance from banks. However, securitisation must never contain toxic loans again or else the markets will shut again.”
Tony Ward, chief executive of Home Funding, also welcomed the securitisation as a sign that the problems in the mortgage market had begun to ease. At the time of going to press,
Nationwide was unavailable for comment.
