Commercial Finance Specialists

Residential and commercial mortgage lenders have been engaging in securitisation deals this week.

Investec, the parent company of specialist lender Kensington, has launched a £204 million securitisation. The deal, Gemgarto (an anagram of mortgage), is supported by a pool of prime residential mortgages, all of which were instigated by specialist lender Kensington. The notes are expected to be rated AAA by credit rating agencies Standard & Poors, Fitch and DBRS.

Head of Kensington, Keith Street, noted: "Initial feedback from ratings agencies and investors has been hugely positive and this is testament to the high quality of the prime assets that have been originated by Kensington. I am looking forward to working with my colleagues at Investec on more deals of this nature in the future as we continue to build responsible and sustainable recovery in the UK mortgage market."

Rocked by mass-market lenders and limitations on capital, the Kensington Group was bought out by Investec for a knockdown £283 million in 2007. In 2009, however, Investec's credit rating was downgraded due to its exposure to Kensington's sub prime mortgage book. Moody's noted that the 'potential for asset quality deterioration' had increased.

Kensington declare their focus to be in high quality prime assets. Investec declare the total value of mortgage assets to be decreasing. Of £4.7 billion in 2010, £2.9 billion of these were securitised, with the remainder largely provided by third-party funders.

Paragon Mortgages, the specialist buy-to-let lender, also returned to the structured finance market on Wednesday, which marks the revival of a model led by securitisation. Lead managers Lloyds Bank Corporate Markets, Macquarie, and Morgan Stanley put a £120.6 million offering on screens by mid-afternoon.

The company was forced to stop lending in 2008 after struggling to obtain funding, and only resumed buy-to-let mortgage lending last year. It has recently been buying loans from RBS to offset the difficulties it has faced with mortgage finance in recent years.