Arranger and Lead Manager for Amicus’s debut bridge loan portfolio securitisation. This was the first ever securitisation of a portfolio comprised exclusively of bridge loans, which required investor education and enhanced structuring as the loans were relatively short in duration and did not pay a current coupon.
Amicus was a specialist bridge lender (non-bank) and was seeking to raise capital against a pool of short-term bridge loans, secured predominantly against UK residential and commercial properties. Amicus required the new financing to be on a more cost efficient basis together with a higher advance rate and broader eligibility criteria than its current warehouse line and other potential term financings. Amicus also wished to get access to the institutional investor market for the first time.
- We proposed a privately placed and unrated £100m term securitisation to be sold to institutional investors. As it was the first deal of its kind, the transaction was structured in conjunction with investors to reduce execution risk, and the deal involved significant investor education on the key features of the UK bridge loan market. HSBC were brought into the transaction as they had an existing relationship with Amicus.
- Due to the absence of cash interest on most bridge loans, a liquidity fund as well as revenue and principal deficiency ledgers were structured, funded by excess spread to ensure bond interest could be met. In addition, to address the mismatch between the loan and bond maturities, a revolving pool with a 2.5-year replenishment period was incorporated into the structure. The eligibility criteria for loans were much broader than the existing warehouse line, and the advance rate was significantly higher at 95%, leaving a 5% retention piece for Amicus and their sponsors.
- The transaction was successfully completed and comprised the first securitisation in Europe of a pool comprising exclusively bridge loans, setting a new precedent in the market. The transaction also introduced global institutional investors to Amicus’ platform for the first time. The difference in the interest rate earned on the bridge loans and the very competitive blended interest rate on the bonds together with the high advance rate, meant the transaction was far more profitable for the client compared to other financing options.