Royal Bank of Scotland is preparing to securitise the £550m senior debt used to fund Blackstone’s purchase of the Project Isobel loan book.
The bank had considered syndicating the debt, but market sources said that it now has a team working on packaging the debt into a CMBS to achieve a better sale price.
One debt specialist said: “There is better execution in securitisation because of the premium banks are currently charging for syndication, which is viewed as ‘helping out a competitor’ at a time when capital is such a scarce resource.”
However, he added, the bonds are not expected to be an easy sell to investors as the underlying collateral includes a number of different “pieces” including mezzanine debt, syndicated loans and opco-propco positions.
The loan portfolio deal, which had a face value of £1.36bn, closed on 20 December with private equity firm Blackstone purchasing 25% at a circa 30% discount. It was financed by RBS with three-year £550m senior debt, which was priced at around 600bp over the three-month London inter-bank offered rate (LIBOR) at 60% LTV.
The decision comes as the European securitisation market shows signs of recovery, with three securitisations this year after a patchy re-opening in 2011.
RBS is leading the largest property-backed securtisation currently being offered to investors: the sale of bonds backed by four UK Centre Parcs holiday villages owned by Blackstone.
The bank is behind the transaction to underwrite and sell a £740m senior loan and a £270m junior loan, which will be sold to investors to refinance an existing £1bn of debt secured against the properties.
Deutsche Bank also continues to be active in the CMBS market following its flagship Chiswick Park deal last year, which was the first securitisation since the market closed in the downturn.
The bank brought a second deal – a £210m loan secured against the 50% stake in Westfield Merry Hill shopping centre – to the market.
In January, Tesco completed the securitisation of a £440m portfolio of 11 supermarkets in a transaction arranged and underwritten by HSBC, Goldman Sachs, RBS and Lloyds Banking Group.
