28 May 2015 – Expansión
Debt issues amount to €2,350 million to date in 2015 / UCI, owned by Santander and BNP, is finalising the first mortgage securitisation in the market since 2007 and the Socimi Uro is closing the first rental income securitisation in Spain, for €1,345 million.
The securitisation market is being revived. Over the last few days, two Spanish companies have gone to the market to raise almost €1,700 million using these structured financing instruments, which have been in disuse since the burst of the subprime crisis in 2007.
Both of the companies are partially owned by Santander: Uro Property, the Socimi that owns one third of the bank’s (branch) network in Spain, closed a €1,350 million securitisation yesterday to refinance its business; and Unión de Créditos Inmobiliarios (UCI), jointly owned by Santander and BNP, is finalising the first mortgage securitisation since 2007, amounting to €342 million.
These two transactions come after a deal closed by Santander in February, involving the placement of a securitisation amounting to €668 million containing loans to finance car purchases granted by the Spanish branch of the French bank Banque PSA, the financial arm of Peugeot Citroën (which has an alliance with Santander). In total, these three transactions amount to €2,355 million.
Innovative debt issues
The largest transaction, the one involving Uro Property, was completed yesterday afternoon. The real estate company – controlled by Santander, CaixaBank, Atisha and Phoenix Life – has refinanced its debt through a securitisation amounting to €1,345 million, over a term of between 22 and 24 years. The most innovative aspect of this transaction is that Uro is securitising the rental income that it receives from the 750 Santander branches that it owns until its rental contract with the bank comes to an end.
The real estate company agreed a fixed rate of 3.348% with investors – mostly insurance companies and fixed income funds – whereby cut its financing cost almost in half from 6%.
Goldman Sachs has led this issue and has been supported by BNP, Santander and CaixaBank. The securitisation will be structured through a company in Ireland.
“It is quite an innovative transaction in the debt market; issues of this type have not been seen before, except for in the UK. With this, we acheive the three main objectives that we set when we took over the reins at Uro, namely to: list the company on the Alternative Stock Market (MAB); sell part of the branch portfolio [the company transferred 381 branches to Axa]; and refinance the debt”, said Carlos Martínez Campos and Simon Blaxland, Chairman and CEO of Uro Property, respectively.
In the case of the issue by Unión de Créditos Inmobiliarios, the operation is expected close this week, for €342 million.
The fund, which issues bonds backed by 3,761 loans in total for the purchase of primary residences, is called FTA RMBS Prado I and matures in 2055. The total volume of this fund amounts to €450 million, but only the highest quality tranche is going to be sold, corresponding to the €342 million issue, which has an ‘Aa2′ rating according to Moody’s, the second highest possible.
To carry out this issue, both Santander and BNP Paribas have conducted several presentations with investors around Europe. The definitive interest rate is expected to be set today.
Asset securitisations received a significant setback after the burst of the subprime crisis, given that it was structured financing that unleashed the crisis in the first place. In Spain, the market also shut down, because even though simpler and more transparent assets were traded here, they were the main source of financing of the credit boom until the burst of the real estate bubble. The outstanding balance of this type of asset exceeded €300,000 million in 2006, according to data from AIAF.
In recent years, the ECB has made significant efforts to revive this market and with this in mind, it started to buy securitisations in Europe in December.
Original story: Expansión (by J. Zuloaga and D. Badía)
Translation: Carmel Drake
The post Santander & Uro Property Revive The Securitisation Market appeared first on Aura Real Estate Experts.
Source:: AURA Real Estate Experts