The specialist mortgage lender said it was also the first such deal from a programmatic RMBS issuer.
Kensington said, as the most frequent issuer of mortgage bonds in the UK market, it was considered a leading indicator of the health of the markets by debt investors.
It explained its RMBS bonds typically traded at a premium to those of other specialist lenders, owing to its 25-year track record, low default rates and its industry-recognised data platform Vector.
The securities were bought by a mix of global institutional investors who have an established track record of acquiring Kensington’s securities.
Although the deal was announced to the market on Wednesday (17 June) it had already had interest from investors allowing Kensington to announce and price this deal within only two days.
Kensington publicly placed seniors and mezzanine bonds to 17 major investors evidencing their confidence in Kensington’s UK lending platform. The seniors priced at 130bps over SONIA which is 10bps tighter than another UK RMBS transaction that priced earlier this week.
The transaction will raise £400 million of funding for the group to continue to support complex and underserved borrowers to get on the property ladder.
Playing an active role in the market
Alex Maddox, capital markets director at Kensington Mortgages, said the global financial markets were a hugely important source of funds for the UK housing market.
“While everyone assumes that the flow of money supporting British housing is all about the big banks, that’s not been true for many years,” he said.
“About 20% of the cash underpinning UK house purchases is coming from pension funds and debt investors around the world.
“At the start of the COVID-19 pandemic, the Bank of England was quick to ensure that funding was made available to banks and building societies so they could keep lending – which was welcome.
“With wholesale markets reopening, non-bank lenders such as ourselves can play a more active role in the market again, and help more people towards a house purchase.”
