Amicus prices first UK short-term MBS

The real estate lender has structured a renewable £100m mortgage-backed securitisation of its loans.

Short-term real estate lender Amicus Finance has issued its debut securitisation, a £100 million ($158 million; €135 million) mortgage-backed security (MBS).

Brookland Partners, a sister company of Amicus, and HSBC helped the lender place the unrated notes with a mix of UK and foreign private investors, Amicus chief executive John Jenkins told PDI

The MBS is based on short-term loans with tenors ranging from six to 12 months. The vehicle, Amicus Mortgage Finance 2015-1, matures in July 2018 and so has a two-and-a-half year replenishment period allowing Amicus to roll newly originated facilities of between £100,000 and £5 million into the MBS. 

The majority of the underlying loans hold first lien security over UK residential property and the portfolio has a weighted average loan-to-value of around 60 percent. 

The securitisation was unrated, but uses HSBC’s internal rating system to divide the underlying assets into four tranches, Jenkins said. The £78 million class A notes included 22 percent credit enhancement and priced at 335bps over one-month Libor. The rest of the capital structure comprises:

 

  • £12m class B notes with 10 percent credit enhancement, priced at 625bps over one-month Libor;
  • £5m class C notes with 5 percent credit enhancement, priced at 900bps over one-month Libor; 
  • £5m equity tranche which will be held by Amicus.

“This is a first for Amicus and, we believe, a first for the UK market. We are very excited to have launched and completed this new transaction. We are in a strong position to offer attractive risk adjusted returns driven by the quality of our loan portfolios and our track record in underwriting and risk management,” said Jenkins.

 

Amicus has been contemplating tapping the securitisation market to allow it to recycle capital back into new lending since the firm was established six years ago. The idea gained more traction in 2012 when it secured a credit line from HSBC and had built a track record, said Jenkins. 

Assuming there is further appetite, Amicus will issue more MBS to finance new lending, he added. 

The unrated vehicle was privately placed with investors by Brookland and HSBC, including tapping the institutional investor relationships of Omni Partners, parent to both Amicus and Brookland, Jenkins said. 

Brookland Partners and HSBC were advisers and agents to Amicus. Amicus is owned by Omni Partners LLP, the London-headquartered investment manager.

In February, Amicus changed its name from Capital Bridging as it expanded its offering to include development and short-term loans on top of its existing bridging finance products. It has made £400 million of loans since launch in 2009 and has grown to lend around £30 million a month.