23rd Sep 2019 13:57
(Alliance News) - EJF Investments Ltd on Monday said it has invested GBP10.3 million in a collateralised debt obligation backed by US small and medium banks.
A collateralised debt obligation is a type of asset-backed security. It is a security that repackages individual fixed-income assets like mortgages, corporate debt, auto loans or credit card debt into a product that are then sold on the secondary market.
The financial sector focused investment company has invested in the preferred shares issued by Financial Institution Note Securitization 2019-1 Ltd. The underlying collateral of the 2019-1 Securitization mainly consists of bank subordinated notes and senior unsecured notes issued by 45 US community and regional banks and their holding companies, with an aggregate value of USD250.5 million.
Approximately 87% of the collateral accrues interest at a weighted average fixed coupon of 6.3% for five years initially after which the interest rate floats at a weighted average spread of 3.6% over US three-month London Interbank Offered Rate, EJF said. The remaining 13% of the collateral has a fixed interest rate with a weighted interest rate of 6.5%.
EJF Investments said the investment is in line with the company's strategy and represents seventh risk retention investment in a securitisation sponsored by EJF Capital LLC, the company's investment manager.
Shares in EJF Investments were untraded at 171 pence each in London on Monday afternoon.
By Tapan Panchal; [email protected]
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