19th Nov 2015 11:55
LONDON (Alliance News) - The Paragon Group of Companies PLC on Thursday said it has completed its latest securitisation, attracting "strong demand" from both sterling and euro investors, meaning it has now issued a total of GBP1.2 billion over the last 12 months.
Chief Executive Nigel Terrington said he was pleased to have completed the Paragon Mortgages (No.24) PLC securitisation against a "challenging period" in the market. Paragon Group consists of a mortgages arm, which is a specialist buy-to-let lender, and also plays host to consumer debt purchase and retail banking divisions.
Securitisation usually works by selling a package of assets, such as mortgages, to a special purpose vehicle, which then puts cash flows from the underlying assets, i.e. the mortgages, together as securities which can be bought and sold by investors. Securitisation enables the originator, in this case Paragon, to fund new originations. The overall securitisation market has been muted in Europe since the financial crisis of 2008-09, and regulators have been mulling over how to effect its sustainable revival.
Paragon Group's GBP350.1 million securitisation consisted of the following:
- EUR125.0 million of Class A1 Notes priced at 110 basis points over three month EURIBOR (GBP88.4 million Sterling equivalent);
- GBP208.3 million of Class A2 Notes priced at 150 basis points over three month LIBOR;
- GBP19.3 million of Class B Notes priced at 245 basis points over three month LIBOR;
- GBP25.4 million of Class C Notes priced at 320 basis points over three month LIBOR; and
- GBP8.75 million of Class Z Notes retained by a Paragon Group company.
A Paragon Group company provided a GBP8.75 million first loss fund, the company said.
The banks which managed the securitisation were Lloyds Bank Corporate Markets, Macquarie Bank Ltd London Branch, Morgan Stanley, Natixis and Bank of America Merrill Lynch.
Shares in Paragon Group were down 3.9% at 404.87 pence on Thursday late morning. The company is due to report results for the financial year ended September 30 on Tuesday next week.
By Samuel Agini; [email protected]; @samuelagini
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