30th Apr 2020 16:37
(Alliance News) - Paragon Banking Group PLC on Thursday said it has completed a buy-to-let mortgages backed securitisation worth GBP648.3 million.
A securitisation involves pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling their related cash flows to third party investors as securities.
The FTSE 250-listed bank said the securitisation Paragon Mortgages No 27 PLC - arranged by Lloyds Bank Corporate Markets PLC and BofA Securities - comprises GBP760 million of prime buy-to-let fixed rate mortgage assets originated by Paragon Bank PLC and Paragon Mortgages Ltd, creating GBP648.3 million of AAA rated senior bonds for the company.
Paragon said the senior bonds will be used as collateral for the Bank of England repo funding facilities and the Term Funding Scheme with additional incentives for SME scheme. It added that the bonds are also available as security for commercial repo transactions with other institutions.
"Covid-19 has adversely impacted financial markets since March, including the RMBS market where margins have widened significantly. We have therefore decided to retain the PM27 notes as an efficient contingent liquidity resource. We expect the Notes to be eligible for utilisation in the Bank of England's term funding schemes, including TFSME, and will provide a cost-effective alternative to the RMBS market," said Chief Executive Nigel Terrington.
The stock closed 4.8% lower at 333.00 pence each on Thursday in London.
By Ife Taiwo; [email protected]
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