Four UK banks have issued a “record-breaking” £30.5bn (€38.3bn) of covered bond medium term note (MTN) private placements since the Bank of England launched its Special Liquidity Scheme (SLS) on April 21, FT Mandate has learnt.
The banks - HBOS, Nationwide, Abbey, and Barclays - have issued the securities which can be used as collateral for additional funding under the new scheme.
According to preliminary figures from mtn-i, the information provider, the combined volume issued by the four banks dwarfs the £21bn sold to investors before the end of April. Abbey has raised £13bn, HBOS £10bn, Barclays £2bn, and Nationwide £5.5bn in two tranches.
It is expected that the money raised by the banks will be used to take advantage of the Bank of England’s liquidity scheme, instead of being sold to institutional investors.
Under the SLS, UK mortgage banks can swap these securities with the central bank for treasury bills for a period of up to a year, with possibility of extension for up to three years. The borrowers pay a premium over 3-month Libor determined by the maturity, quality and market value of the securities they are using as collateral.
Separately, Europe’s securitisation market has been celebrating a rarity for 2008 – a transaction successfully placed with investors on the public markets. The €318m securitisation of financial lease receivables was originated by Italian leasing company A-Leasing and arranged by Raiffeisen Zentralbank Österreich (RZB), BNP Paribas, and Finanziaria Internazionale. “This deal represents one of the few securitisation transactions successfully placed with investors under current market conditions,” said Patrick Butler, member of the board responsible for treasury and global Markets at RZB, the Austrian bank. “It underlines our ability to execute large scale transactions despite the current risk-aversion. Strong distribution and the quality of the securitised portfolio are responsible for this success.”
Further positive news for the industry came from France, where a new law could pave the way for securitisation to be more investor-friendly. Under the new law, receivables can be assigned to a special purpose vehicle (SPV) governed by foreign law, reducing the need to have domestic vehicles for domestic assets. Experts indicate a French SPV can be as competitive as an Irish or UK SPV in the case of a pan-Europe securitisation as a result of this directive.
The French legal framework was amended to implement an EU directive allowing member states to reinsure insurance risk via the capital markets. The UK and Ireland have already incorporated this directive into securitisation law.
IN BRIEF
Impax Asset Management has launched an institutional share class for the IFSL Impax Environmental Leaders Fund, launched in March 2008. The fund invests globally in public companies which derive at least 20 per cent of revenues or profits from, or have at least 20 per cent of their capital invested in alternative energy and energy efficiency, water treatment or waste and resource management.
Pensions risk consultant Redington Partners has argued that UK pension schemes are running similar risk to Wall Street banks – without the benefit of those banks’ risk management infrastructure.
The £3bn (€3.75BN) Lothian Pension Fund has awarded responsible investment and corporate governance advisory firm Hermes Equity Ownership Services , part of the executive arm of the BT Pension Scheme, its first UK local authority pension fund mandate, for “voting and engagement overlay”.
The Universities Superannuation Scheme (USS) has allocated $600m (€377m) to Constitution Capital Partners (CCP), a Boston based private equity firm specialising in North American mid-market buyouts. The USS-Constitution Fund will comprise a fund of funds, nvested in North American PE funds, and a co-investment fund.
