TotalDerivatives: UK sub-prime fallout will be manageable

Anxiety rippled through the UK credit market when the UK’s top non-conformist mortgage lender, Kensington Group, said it was considering a sale to a US bank. Roger James explains why.

A version of this article first appeared in Total Derivatives.

Total Derivatives is the prime source of real-time news and analysis of the global fixed income derivatives markets.


The problems with the sub-prime mortgage market in the US – both real and imagined – rumble on. In the UK, however, there has been a stoic refusal to panic.

This was made clear earlier this month as Merrill Lynch, Lehman Brothers and Kensington Group sold bonds backed by sub-prime or, to use the UK terminology, non-conforming, mortgages, bringing the 2007 total of such issuance up to 150% of the sum achieved at the same point in 2006.

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