Kensington prices FSQ 20-1 taking total issuance over £10billion

Today Kensington Mortgages has priced its latest securitisation transaction sized at £650 million, bringing its total RMBS issuance to over £10 billion since the group was formed under its current ownership in 2015.

The deal marks the tenth from the lender’s Finsbury’s Square shelf, which includes recent owner-occupied and buy to-let loans. The transaction was priced at SONIA +80bps for the senior tranche, reflecting excellent market conditions last seen in early 2018, achieving a total cost of funding 26bps cheaper than the last Finsbury Square transaction in 2019.

The deal saw exceedingly high demand from investors, leading to the transaction being upsized from an initial size of £490 million. All tranches were oversubscribed multiple times, even after the upsize. This is the first Kensington transaction to be issued in both RegS and 144a format, which allowed the group to attract new US fund investors. On another positive note, we saw the resurging appetite from European investors, as the UK political and macro environment stabilised.

With this transaction, Kensington has raised more than £10 billion on the RMBS primary market since 2015 and has reinforced its dominant position in the UK securitisation market, leading other specialist mortgage lenders including Charter Courter/Precise Mortgage (£3.6 billion), Paragon (£2.3 billion), Paratus (£2.3 billion) and Belmont Green (£1.6 billion).

Earlier in the week, Kensington announced the launch of a new web-based investor portal where current and future bond investors are able to download any documents and loan level data from Kensington’s existing RMBS deals. In a major step forward for investor access to information, a data dashboard is also available – this tool has been developed by Kensington Intelligence. Kensington Intelligence is the new data and analytics platform of Kensington Mortgages, which manages £11 billion in mortgage assets.

The data dashboard will allow investors to utilise Kensington Intelligence’s data visualisation tools (e.g. production of stratification tables and visualisation of historical performance trends for single or combined deals), in order to analyse mortgages that secure the Kensington RMBS programmes. The portal aims to ensure best in class transparency and ease of access to Kensington’s documents and data. The investor portal launch is the first time Kensington Intelligence’s tools have become accessible to third parties, which is a major step forward in the commercialisation of the Kensington Intelligence platform.

Alex Maddox, Capital Markets & Digital Director, Kensington Mortgages comments: “We’ve started the new year in a great position. With the successful pricing of our first securitisation of 2020 at over 10 bps lower rate than Precise’s recent deal, Kensington continues to be the most active issuer in the UK RMBS market, exceeding the £10 billion mark of RMBS issued.

“In 2019, Kensington Mortgages completed a record volume of originations at £1.4 billion. The confidence demonstrated by investors in our business will underpin our continuous efforts to generate more funding and meet the growing demand of our mortgage customers.

“As part of our commitment to this market, we’re pleased to announce the launch of our investor portal, and it reflects our first step to offering Kensington Intelligence’s platform to third parties. Both announcements reinforce the strength of our position and we are confident our portal will be a useful tool for our investor base going forward.”