EBS Building Society has securitised EURO 500 million in its first capital markets action of this kind. It follows last year’s EURO 1 billion medium tterm note programme, but the securitised bonds are off-balance sheet and involves more complex, structured process.
Moodys have assigned a ‘AAA’ rating to over 95 per cent of the bonds issued out of securitisation special purpose vehicle, Emerald Mortgages. The remaining, subordinated bonds were rated A2. Fitch IBCA assigned similar ratings to the bonds.
Most of the bonds were placed by UBS Warburg, with ABN Amro placing 15 per cent and Davy Stockbrokers 12.5 p.c. At ABN Amro, the Irish liaison manager was Aidan Williams and Niall Doyle lead the Davy’s work. 85 per cent of the bonds were sold in mainland Europe. Through John Bowe of the Dublin office, ABN AMRO also provided liquidity and swap facilities to Emerald as part of the credit enhancement process.
Speaking to Finance, Jackie Gilroy of EBS said that the securitisation issue had been a nine month project with an intensive six-month phase. A substantial team of people had made the process work, she said. The legal team from Arthur Cox was headed by partner Grainne Hennessy, with assistance from Mark Saunders and Orla O’Connor.
The building society said this was the first time an Irish law firm, Arthur Cox, had been the lead legal adviser to a mortgages securitisation.
Tax advice for the special purpose vehicle was provided by Caroline Devlin and Niamh Caffrey at Arthur Cox while EBS’s auditors, Ernst & Young, will audit the vehicle and provided tax advices to the building society in relation to the transaction.
Gilroy added that securitisation had the advantages of capital efficiency and off-balance sheet treatment, but it was complementary to, rather than a replacement for, the Euro MTN programme. It allows access to another form of funding with a longer maturity profile. She said the building society had no plans for further securitisations this year.
The Society was hopeful, she said, that when it came to the process again, some of the legal disadvantages it faced as a building society, as distinct from a plc, would have been removed. The Building Societies Act was framed in the late 1980s and did not specifically legislate for securitisation. Amendments to the Act which would facilitate further issues could be made in the planned bill to introduce an Irish version of ‘Pfandbriefe’, on-balance sheet mortgage-backed bonds. These would represent a further funding mechanism which would be positive for EBS, she said.
The Irish Mortgages and Savings Association and the Irish Bankers’ Federation have submitted draft legislation on mortgage bond issuance to the Department of Finance. It is hoped that enabling legislation might be introduced in autumn. |
