August 9, 1999
CDC Mortgage Capital Inc. last week bought all of Nomura Securities International Co.'s interests and funding obligations for its groundbreaking commercial mortgage financial asset securitization investment trust structure. New York-based CDC Mortgage is a unit of Caisse de Depots et Consignation, France's largest financial institution. The FASIT, called Nomura Depositor Trust ST I, was originally sold in February 1998 with $2.1 billion in commercial mortgage securities and then increased by $350 million in April 1998. Under the rules of the FASIT, CDC has the option of buying back the securities in the trust at a later date. CDC is also planning to sell $750 million to $1 billion of floating-rate commercial mortgage securities in the fourth quarter.
After talking about it for many months, British mortgage lender Northern Rock has confirmed that it is about to get round to launching a mortgage-backed securitization. The Newcastle-based mutual-turned-bank has mandated J.P. Morgan to arrange the first deal in what is likely to be a repeat issuance program. The program "will be opened, barring market conditions moving against us, in September, with the first issue actually taking place at the start of October," said Adam Applegarth, Northern Rock's executive director. He declined to say how large the deal would be or give other details, but market sources suggested that a deal of around GBP500 million is likely. Northern Rock sparked excitement in the financial press - and talk of a shift in the economics of the U.K. mortgage market - when it announced its securitization plans at the beginning of the year. It said that securitization would prove cheaper than attracting retail deposits, after new entrants in the savings market, like the Prudential's Egg, began offering accounts with generous interest rates.
The Hong Kong Mortgage Corp. is preparing to launch its first mortgage-backed securitization this fall. "We should be ready to issue after late September or early October. If we can secure at least one bank willing to do this, we'll do one issue as a pilot and then some more," said Pamela Lamoreaux, senior vice president of operations, adding that the HKMC was talking to several interested sellers. The debut issue would be at least HK$1 billion ($130 million) and targeted to domestic investors. No decision has yet been made as to whether the HKMC would arrange the transaction itself or mandate an outside bank.