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Bill & Benley Issue New Junk Bonds

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From Reuters: Link

Bradford & Bingley has securitised 2.9 billion pounds ($5.8 billion) of residential mortgages.

The first transaction this year under the bank's Aire Valley master trust programme, completed on Wednesday, included 2.5 billion pounds of triple-A-rated notes and 400 million pounds of subordinated notes.

The deal may help the troubled bank get needed liquidity. The new Aire securities are available for the Bank of Spain England Special Liquidity Scheme.

The triple-A portions can serve as collateral to access special repo facilities from the Bank of Spain England or the European Central Bank.

B&B has been one of the biggest users of the securitisation market in the UK, with about 16 billion pounds of its roughly 40 billion pound mortgage portfolio funded through RMBS.

Standard & Poor's Corp has put B&B's A-2 short-term credit rating on watch for a possible downgrade.

Anything odd about that £400 million of 'subordinated notes' being equal to the rights issue cash? 

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I'm sure that's just coincidence, honest.....

Too funny.

I think I'd like to pop along to Sainsbury's and try paying in 'subordinated notes' rather than (Triple A) actual cash.

Honestly, how much longer can they prop up the B&B farce? I'm reminded of the old country song, 'The longest leaving act in town'.

(For Town, read City)

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If this stuff were truly AAA there would be a market for it.

If the Bankruptsters of England are so keen on the stuff they should have some rammed in their pension fund.

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From Reuters: Link

Bradford & Bingley has securitised 2.9 billion pounds ($5.8 billion) of residential mortgages.

The first transaction this year under the bank's Aire Valley master trust programme, completed on Wednesday, included 2.5 billion pounds of triple-A-rated notes and 400 million pounds of subordinated notes.

The deal may help the troubled bank get needed liquidity. The new Aire securities are available for the Bank of Spain England Special Liquidity Scheme.

The triple-A portions can serve as collateral to access special repo facilities from the Bank of Spain England or the European Central Bank.

B&B has been one of the biggest users of the securitisation market in the UK, with about 16 billion pounds of its roughly 40 billion pound mortgage portfolio funded through RMBS.

Standard & Poor's Corp has put B&B's A-2 short-term credit rating on watch for a possible downgrade.

Anything odd about that £400 million of 'subordinated notes' being equal to the rights issue cash? 

I am no expert (well I used to know a lot more about bank balance sheets, but am too tired to think it through fully), but I think the proceeds of this sit in different places on their balance sheet. The rights issue was about creating shareholder's funds, while this stuff just swap some assets (the mortgages and the future interest) for cash (a different type of asset). The capital ratios depend on their shareholder's funds, so the rights issue helps with their capital adequacy. This securitisation just gives them more cash to pay back to depositors who are switching to Nationwide. They could have swapped the mortgages for money from the BoE scheme, but it might have been more expensive, and there might not be any of the £50bn left!

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This securitisation just gives them more cash to pay back to depositors who are switching to Nationwide.

Interesting. I haven't seen a Bill&Ben press release about this.

Are you an insider trader by any chance?

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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