NatWest securitisation deal set to be launched

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The Independent Online
NatWest will aim to officially launch and price its pioneering $5bn (pounds 3.1bn) securitisation deal today. Analysts say that success by NatWest would open the flood gates to copycat moves by other banks.

Last night NatWest's sales team was in the final stages of launching the deal after a series of world-wide road shows to line up buyers. The bank is selling $5bn of corporate loans by repackaging them as securities which can be sold to bond market investors in a process known as "securitisation".

The securities are being sold by a special purpose company, Rose Funding, which takes loans of up to five years' maturity made by NatWest to 300 companies and converts them into floating rate notes (FRNs) and commercial paper.

Rose will issue the FRNs in different tranches. Fitch Investor Services, the US credit rating agency that specialises in securitisation issues, has assigned provisional ratings from AA to unrated on the FRNs.

Fitch expects nine tranches of FRNs to be issued - six of which are rated AA, two are rated A, one BBB and one $100m tranche has no rating at all.

The agency expects $2.5bn of commercial paper to be issued and rates it F-1+, the same as the rating it assigns to the bank for structured transactions.

The deal releases pounds 250m of capital for NatWest and increases the return on its corporate loans, where profit margins have shrunk because of tough competition. This is a problem shared by many banks, but until now they have held back from securitising corporate loans because they fear a bad reaction from their customers.

NatWest claims the structure of this deal means its relationship with clients will not be damaged as their identity will not be passed on to buyers of the new securities.

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