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First Active plc completes Ireland’s largest mortgage securitisation raising €1.75 billion Back  
After over a two-year absence from the securitisation market, First Active came back with a €1.75 billion transaction in late November. Donal Corbett, Group Treasury at Ulster Bank, outlines some of the features of the deal.
This was the largest Irish residential securitisation deal issued to date and it was the ninth deal from First Active. It was our first deal since the acquisition of First Active by the Royal Bank of Scotland Group in January 2004, and we have securitised over €5 billion in total since our first transaction in 1998.
Donal Corbett

First Active is a wholly owned and fully integrated part of the Ulster Bank Group, which itself is an integrated part of RBS. Securitisation is one of the funding options that is available and complements Ulster Bank Group’s recent floating rate note (FRN) funding that we issued in June 2005. First Active, through the Celtic programme, has a long and established history of securitisation and is well placed to offer the Ulster Bank Group advantageous and diversified funding.

RBS’s sources of funding are well diversified and include wholesale and retail deposits, commercial paper and term funding programmes. RBS’s funding strategy aims to continue to maintain that diversification and, from time to time, would be expected to tap local sources of funding where suitable opportunities arise. The Celtic transaction fits in with that approach.

The transaction was arranged and lead managed by RBS with Citigroup as co-manager. As subsidiaries of RBS, Ulster Bank Group and First Active are uniquely placed in the Irish marketplace to leverage RBS’s expertise and global reach in arranging similar transactions.

Overall we were very pleased with the deal, in particular the pricing and the diversification of investors that we achieved. The pool was of very high quality with average seasoning of 22 months and weighted average Loan To Value of 68.57 per cent (or 59.9 per cent when indexed). Given the size of the deal we were able to target different investor segments by issuing both fast pay and slow pay AAA tranches in addition to an A rated tranche. We had very strong demand for all 3 tranches, with significant levels of over subscription, which demonstrates the international markets confidence in (i) First Active, (ii) the quality of our mortgage book and (iii) the Irish economy - in particular the housing market. Both the fast pay AAA tranche and the junior A tranche came at the tight end of price talk (5bps and 27bps respectively) and while the slow pay tranche priced in line with price talk at 12bps it was heavily oversubscribed at that level.

We had a very extensive road show with two teams on it. We presented in Dublin, London, Paris, Amsterdam, The Hague, Munich, Frankfurt, Oslo and Stockholm. Whilst investors focused on the Irish housing market they were also very interested in the First Active arrears management process and First Active’s position within both the Ulster Bank Group and the Royal Bank of Scotland Group.

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