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Lloyds Wants To Sell Rmbs Again

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Lloyds to reopen RMBS market

Reuters Tuesday 22 September 2009 04:00

LONDON (Reuters) - Lloyds Banking Group <LLOY.L> said on Monday it would launch an asset-backed deal this week that would reopen the residential mortgage-backed securities market after a year-long drought. It will be the first public residential mortgage-backed issue since August last year, when the credit crisis froze the market banks had used to finance home loans.

More detail is in this FT article

What shocks me most is that these are rated AAA. Have we learned nothing?

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from yesterdays article in reuters:

The Lloyds' issue comprises three tranches, which include one of 1.565 billion pounds and one of 1.25 billion pounds, which has already been placed with an investor, Lloyds said.

I am fully confident they have got their sums right

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Lloyds to reopen RMBS market

Reuters Tuesday 22 September 2009 04:00

LONDON (Reuters) - Lloyds Banking Group <LLOY.L> said on Monday it would launch an asset-backed deal this week that would reopen the residential mortgage-backed securities market after a year-long drought. It will be the first public residential mortgage-backed issue since August last year, when the credit crisis froze the market banks had used to finance home loans.

More detail is in this FT article

What shocks me most is that these are rated AAA. Have we learned nothing?

The person that pays for the rating agencies to produce a rating is the issuer so I'm not so shocked about the rating. But the rating is not designed to inform the investor of credit-worthiness instead, it is required for most pension funds and State investment vehicles so the buyer doesn't care either way so long as the bonus shows up in the New Year.

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The person that pays for the rating agencies to produce a rating is the issuer so I'm not so shocked about the rating. But the rating is not designed to inform the investor of credit-worthiness instead, it is required for most pension funds and State investment vehicles so the buyer doesn't care either way so long as the bonus shows up in the New Year.

are you suggesting more rating agency fraud?

dont forget that the issuer just has to get an AAA rated issuer of CDS to cover the thing, and bobs your uncle.

and we all know that CDS is 100% balanced out and NEVER needs a bail out......coughAIG.

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Well even the public understand what AAA rated means now; they may have to introduce a higher benchmark. Like the razor company who have decided that if you want to keep selling razors you gotta just keep adding blades.

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As a pension fund what would you want to buy. Browns Bonds or Lloyds TSB 60% LTV value mortgages at 6% interest rates?

But what's the point in even holding cash if the Government is unable to pay its debts?

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As a pension fund what would you want to buy. Browns Bonds or Lloyds TSB 60% LTV value mortgages at 6% interest rates?

60% LTV bonds could soon turn into no value bonds if the pound collapses.

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Lloyds to reopen RMBS market

Reuters Tuesday 22 September 2009 04:00

LONDON (Reuters) - Lloyds Banking Group <LLOY.L> said on Monday it would launch an asset-backed deal this week that would reopen the residential mortgage-backed securities market after a year-long drought. It will be the first public residential mortgage-backed issue since August last year, when the credit crisis froze the market banks had used to finance home loans.

More detail is in this FT article

What shocks me most is that these are rated AAA. Have we learned nothing?

I have clearly been mistaken for the last 2 years. I thought the residential mortgage-backed securities market was closed due to investors not wanting the buy the overpriced and overrated sh1t; I never realised that it was due to the banks being unwilling to sell it. :rolleyes:

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The Lloyds' issue comprises three tranches, which include one of 1.565 billion pounds and one of 1.25 billion pounds, which has already been placed with an investor, Lloyds said.

Moneyweek recently:

Almost £300bn of UK mortgage debt was securitised, i.e. packaged up and sold off from bank balance sheets onto the bond markets, between 2005 and 2007.

"That represents more than 90% of the growth in mortgage debt over that period", says CreditSights. And "the world isn't exactly clamouring for British securitised mortgages anymore, and won't be for a long time", says Matthew Lynn on Bloomberg. "With less money coming into the market, there won't be the same kind of demand for houses".

Yet a Rightmove survey at the end of August gave the "encouraging" signal that 78% of respondents reckoned UK house prices won't fall any further this year. And also that "the UK property industry is now seeing a virtuous circle of confidence building upon confidence".

Why's this another worry? Well, as Fidelity's Anthony Bolton explained in the weekend's FT about the stock market, "if everyone is positioned for the market to rise, it means these bullish expectations are already discounted" – i.e. factored into the price. As a result, "the market often moves to make the majority wrong and does the unexpected… so at turning points especially, the correct is the minority view".

And while there are plenty of differences between shares and houses, the principles of crowd behaviour are the same for every asset class. When almost everyone is bullish, get ready for a price fall. The near-8.5% bounce in property prices within the last six months (using Nationwide's figures at least) now looks ripe for a reversal.

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Lloyds to reopen RMBS market

Reuters Tuesday 22 September 2009 04:00

LONDON (Reuters) - Lloyds Banking Group <LLOY.L> said on Monday it would launch an asset-backed deal this week that would reopen the residential mortgage-backed securities market after a year-long drought. It will be the first public residential mortgage-backed issue since August last year, when the credit crisis froze the market banks had used to finance home loans.

More detail is in this FT article

What shocks me most is that these are rated AAA. Have we learned nothing?

I suspect you'll find these mortgages are of pretty good quality.

I suspect you'll find they do get bought.

If they do get bought then it MIGHT (only might) indicate some re-opening of credit markets which might lead to increased competition... and if we get some increased compeition then we might see some relaxing in criteria and margins on the current deals.

I wouldn't hold your breath though, a market as cold as this could take a year or so to warm up again even if there are no setbacks.

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how are they earning 6% for investors?

They're gonna probably actually pay libor +250 region I would think. Which means you'll probably average about 5%-5.5% over the life of the trade. Not too bad. And at least your return goes up when rates go up unlike gilts.

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I despair... more financial engineering to pump up that mountain of debt just a bit higher... :(

By the time the banks have finished, it looks like the UK will be hollowed out, traded for bank profits and bonuses. All in the name of bits of paper and numbers being swapped about. As a nation, what mugs we are.

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So if Lloyds are selling on the good sh1t, what does that leave on their taxpayer funded balance sheet?

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The next big idea will be for the BOE to print money as QE and buy this new crap from a tax-payer backed bank. You could not invent a better game of pass the parcel.

Edited by BalancedBear

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Why are JP Morgan buying it?

Becasue I suspect they see it as a good investment . While it may surprise some, these kind of securitisations are not a bad idea in and of themselves, like anything else they only turn bad when bastardised and mucked around with. In their purest form there are a lot of buyers out there for these particular assets... and if anyone thinks they are a terrible idea I'd suggest you back entirely away from any current company pension arrangements you might have as its highly likely that pension funds will be the biggest buyers in the end of a resurgent wave of securitisations of mortgage debt.

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Lloyds to reopen RMBS market

Reuters Tuesday 22 September 2009 04:00

LONDON (Reuters) - Lloyds Banking Group <LLOY.L> said on Monday it would launch an asset-backed deal this week that would reopen the residential mortgage-backed securities market after a year-long drought. It will be the first public residential mortgage-backed issue since August last year, when the credit crisis froze the market banks had used to finance home loans.

More detail is in this FT article

What shocks me most is that these are rated AAA. Have we learned nothing?

Yes, we've learned that the taxpayer has an infinitely large chequebook.

To infinity! And beyond!

buzz.jpg

Edited by Injin

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