Content area
Full Text
RBS FINANCIAL Markets this week released details of the synthetic mortgage securitisation it has arranged for UK bank Bristol & West.
The use of synthetic technology to parcel assets other than corporate loans began with two mortgage transactions in Germany in 1998 and is fast gaining widespread acceptance. But Bristol & West's L300m deal, foreshadowed in EW 650 in April, is only the second synthetic MBS in the UK.
In March this year Schroder Salomon Smith Barney arranged an L893.9m transaction, known as Lima, for Prudential's online bank Egg. The deal transferred the credit risk on standard prime mortgages and was placed entirely in credit default swap form. All other details of the deal have been kept private, though it is known to have been rated by Moody's.
Bristol & West first used securitisation in 1994 to parcel commercial mortgages, but had not applied structured finance to its residential assets. It chose the synthetic structure to fulfil a specific objective.
"Bristol & West was not looking for funding...