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RMBS: Issuers turn to MTN funding

Three stalwarts of the European RMBS market have recently established medium-term note programmes, a sign of the cost savings that such shelf issuance can offer. ABN Amro issued a €3.9 billion partial synthetic transaction from its European Mortgage Securities Compartment vehicle, backed by loans to employees or former employees of the bank. And two non-conforming lenders have also established multi-issuance programmes: GMAC RFC has established RMAC Securities with an inaugural £1.2 billion ($2.1 billion) deal and Mortgages plc with its £575 million launch issue. The Mortgages plc platform is called Newgate Funding, and has been arranged by parent Merrill Lynch.

Cost saving and speed of execution are the selling points of these MTN programmes but they also serve as effective branding tools. “The efficiencies vary greatly depending on the type of structure and assets in the pool,” notes one legal expert. “If there is a single pool of assets, savings are much greater than if issuance takes the form of silos within the MTN.” RMBS structures tend to be the latter. The first such multi-seller segregated programme to be set up in Europe was HVB’s Bluestone Securities in December 2004. Bluestone was due to launch its third transaction, which will be roughly £190 million in size, in April.

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