Paragon, the home credit and mortgages group, has completed a new £273 million securitisation aimed at boosting its on-going new lending programme.
The special purpose vehicle, Paragon Mortgages No 18, is backed by Lloyds Bank, Macquarie Bank and Morgan Stanley.
The firm said the securitisation transaction consisted exclusively of buy-to-let assets.
PM18 comprises £238.1 million of AAA rated notes at a margin of 115 basis points over three-month LIBOR, £15.7 million of AA rated notes at a margin of 170 basis points over three-month LIBOR and £13.7 million of A rated notes at a margin of 240 basis points over three month LIBOR.
Subordinated notes totalling £5.5 million will be retained by Paragon and it has also invested £8.19 million in the First Loss Fund, bringing its total investment in PM18 to £13.69 million, or 5 per cent of the issue amount.
Nigel Terrington, Paragon Chief Executive, said: “PM18 marks further progress in Paragon’s buy-to-let funding strategy. This deal is particularly positive as we have increased our transaction size, reduced pricing and we have broadened our investor base.
“We are seeing positive improvements generally in the buy-to-let market following renewed confidence from landlords and we will continue to grow this area of the business in the next 12 months.”
With financial regulators confirming earlier this year that new start-up banks would require less capital than established lenders, buy-to-let mortgage specialist Paragon stopped its plans to buy the banking license of Hampshire Trust, a wholly-owned bank subsidiary of National Counties Building Society, and instead focus on applying for a banking license.
Paragon will announce its full-year results for the 12 months to September 30, 2013 on November 26.
By Jason McGee-Abe
