Securitisation

Kensington Raises £400M Mortgage Bond

London, 19 June 2020: Kensington Mortgages, the specialist mortgage lender, has raised £400m of funding through the wholesale financial markets.

The deal is one of the first residential mortgage-backed securitisations (RMBS) to be successfully sold to investors since the onset of the COVID-19 pandemic and the first from a programmatic RMBS issuer.

Kensington has accessed the market before any of the large High Street banks, or any other regular issuers of UK mortgage bonds.

As the most frequent issuer of mortgage bonds in the UK market, Kensington is considered a leading indicator of the health of the markets by debt investors. Its RMBS bonds typically trade at a premium to those of other specialist lenders, owing to its 25-year track record, low default rates and its industry-recognised data platform Vector.

The securities were bought by a mix of global institutional investors who have an established track record of acquiring Kensington’s securities.

The deal, announced to the market on Wednesday 17 June, has already had significant interest from investors allowing Kensington to announce and price this deal within only two days. Kensington publicly placed seniors and mezzanine bonds to 17 major investors evidencing their confidence in Kensington’s UK lending platform. The seniors priced at 130bps over SONIA which is 10bps tighter than another UK RMBS transaction that priced earlier this week.

The transaction will raise £400 million of funding for the Group to continue to support complex and underserved borrowers to get on the property ladder.