Paragon bond sale reflects rise of buy-to-let
Tuesday 24 September 2013
The buy-to-let lender Paragon has made its biggest sale of bonds backed by loans to landlords since the financial crisis, amid surging demand from major investors.
Paragon was forced to stop lending altogether in 2008 as markets shunned securitised loans, but yesterday it sold £273m of mostly triple-A rated notes. This was its third deal since the market reopened and the biggest and cheapest so far, priced at 1.15 percentage points above Libor.
The sale comes against the backdrop of a strongly recovering buy-to-let market. In the second quarter of 2013 the value of buy-to-let loans jumped 31 per cent to £5.1bn, according to the Council of Mortgage Lenders, as easing mortgage costs tempted landlords into the market.
Its chief executive Nigel Terrington said there had been a 40 per cent rise in the number of institutional investors taking part.
The fund manager Threadneedle will launch an investment trust next month backed entirely by asset-backed securities, and Mr Terrington said Paragon would develop this area of the business in the next 12 months.
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