The portfolio of loans, expected to be launched within the next six weeks, comprises standard prime loans, “non-standard” mortgages, principally self-certified mortgages, and a portion of sub-prime.
If successful, the deal would mark the first time that sub-prime mortgages have been securitised in Europe since the financial crisis, although Bank of America Merrill Lynch reportedly laucnhed a UK subprime securitisation worth close to £1bn over the summer, but lack of demand forced it to withdraw.
Self-cert loans, a big market in the run-up to the crisis, were designed for self-employed people but have been criticised after the discovery of widespread fraud.
The FT suggested this deal was further evidence the securitisation market is steadily recovering, after the Royal Bank of Scotland announced a £4.7bn securitisation last week, after Lloyds jumped in first a year ago.
For banks, securitisation – the process of bundling loans into new bonds backed by the repayments – is a crucial source of financing. Before the financial crisis, a large chunk of UK mortgages were securitised, freeing up banks’ balance sheets to do more lending.
Investec bought Kensington, a specialist mortgage lender in the summer of 2007.
An Investec spokesperson said: “Investec has been holding preliminary meetings with investors to discuss the appetite for a securitisation of approximately £200m of UK residential mortgages.
“Our prospective transaction contains prime mortgages originated through our mortgage lender Kensington Mortgages, which originates prime mortgage loans. Also included are mortgages bought by Kensington from other specialist mortgage originators which comprise of well seasonsed, fully performing loans for specialist, non-conforming customers, such as self-employed people.”
