Venn securitises own Dutch mortgage origination

The fund manager has placed its second Dutch RMBS on the back of strong demand.

Investment manager Venn Partners has raised €347 million through a public securitisation of prime Dutch residential mortgages originated by its lending arm, Venn Hypotheken.

The transaction is Venn’s second publicly placed Dutch RMBS, following the Cartesian 1 transaction in March 2014, which followed its purchase of a home loans book from GE Artesia Bank.

The asset manager said that, due to “strong” demand, the deal priced tighter than initial guidance at a margin of 27 basis points over three-month Euribor, which is 10 bps wider than the latest benchmark Dutch RMBS issue by Rabobank’s Obvion, the largest originator of residential mortgages in the Netherlands.

Venn launched its Dutch lending division Venn Hypotheken last year, with the aim to issue approximately €800 million worth of mortgages in the country by the end of 2017.

The firm was planning to offer approximately half these mortgages to investors on a whole loan basis, the firm’s chief executive officer Gary Mckenzie-Smith, told PDI at the time. Venn’s aim is to issue €2 billion worth of mortgages in the Dutch market per year.

Through the latest securitisation, Cartesian 2, Venn will refinance an existing senior lending facility provided by NatWest Markets. The warehouse facility was put in place in 2015 to enable Venn to ramp up its mortgage origination.

Venn will also use €72 million of the raised capital as pre-funding to finance mortgages that Venn Hypotheken had underwritten but not funded by the deal date.

Rating agencies Fitch and Moody’s awarded a AAA rating to 90.5 percent of the portfolio, which reflects the strength of the Dutch residential mortgage market and Venn’s transaction structure, the firm said.

All rated notes, equal to 97 percent of the aggregate collateral balance, were placed with investors. The issue was 2.5 times oversubscribed.

The transaction attracted interest across a broad geographical range. Around 20 percent of bonds were placed in each of the UK, the Netherlands, France and Germany, with the remainder sold to other continental European investors.

The issue reflects how non-bank lenders are becoming an increasingly important source of RMBS in Europe, at a time when the Dutch RMBS and the wider European ABS markets are squeezed by central bank buying and reduced supply by traditional bank issuers due to regulation, the firm noted.

Venn’s first foray into Dutch mortgages was the 2013 purchase of a €500 million book of home loans from GE Artesia Bank, which it eventually financed through the first publicly placed non-bank Dutch RMBS, Cartesian 1.