The Co-op mandated Barclays PLC, JPMorgan Chase & Co, and Morgan Stanley as joint-lead managers for a planned issue of bonds backed by prime U.K. residential mortgages.
The transaction, Silk Road No. 2 PLC, is expected to be marketed following next week’s Global ABS conference in Brussels, subject to market conditions.
This follows the Silk 1 securitisation, worth £2.5bn, managed by HSBC and JP Morgan.
Ben Hayward, partner, portfolio management, TwentyFour Asset Management, said the Residential Mortgage Backed Securities (RMBS) market is attracting increasing interest from Europe and the US because of the solid performance of the loans and strength of the securities themselves.
Hayward said: “Losses rarely appear on the mortgages, and when they do they are absorbed by excess profit or cash reserves. UK and European RMBS have shown for many years that they are largely immune from the problems faced in the US sub-prime RMBS market that characterized 2007 and 2008.”
Hayward said he expects appetite for RMBS securities to increase over the remainder of the year.
“As we move into 2012 and base rates increase, even more fixed income investors will be driven from fixed rate corporate bonds into floating rate product, such as RMBS.”
