Specialist mortgage lender Kensington Mortgages has raised £650m of funding through the wholesale financial markets.
The deal – RMS32, issued via Kensington’s legacy funding shelf Residential Mortgage Securities – is the largest public residential mortgage-backed securitisation (RMBS) to be successfully sold to investors following the easing of COVID-19 lockdown restrictions.
Kensington is the first issuer to access the UK RMBS markets twice since the reopening of capital markets in mid-June. It has raised in excess of £1bn in the last month.
RMS32 comprises seasoned non-conforming first charge and second charge residential mortgages. It will allow the refinancing of two existing Kensington legacy securitisations, RMS 28 and KMS 2007-1 that will be called in September.
The deal marks the 21st UK RMBS deal issued by Kensington since its acquisition by Blackstone and TPG in 2015, bringing the total bond issuance to over £11.5bn.
The deal has garnered strong demand from the majority of global ABS investors with a total of 17 unique investors across the tranches. It was oversubscribed across all tranches; both senior and junior bonds priced at the tights of any other recent deal brought by a specialist lender since June.
RMS32 is the last transaction of a series of 11 UK RMBS deals placed to the market since its re-opening mid-June evidencing the return of a functioning ABS market in the UK after having been closed for three months.
The transaction allows Kensington to secure more funding to support growing demand from its mortgage customers.
Alex Maddox, capital markets and digital director, said: “Since the markets reopened in June, the RMBS market has seen a flurry of activity.
“This deal’s oversubscription and the fact that we were able to follow a more standard syndication process demonstrates investor appetite for our funding and the strength of our underlying business.
“We continue to be the most frequent issuer of RMBS in the UK RMBS market, and see further opportunities for the year ahead.
“We anticipate the recently announced temporary stamp duty changes will help to kickstart the housing market and increase demand for mortgage products that are tailored and suited to individual’s needs.
“In this uncertain climate, people require pragmatic lenders who are able to take the long view.”