Irish Life & Permanent's UK subsidiary, Capital Home Loans (CHL), has undertaken the biggest securitisation to date by the group, raising over €1.5 billion. CHL securitised a portion of its UK mortgage book, raising money which will be used to fund further lending in the UK market.
CHL is a wholly owned subsidiary of Irish Life & Permanent which specialised in providing mortgage finance for the buy-to-let market in the UK. It has had considerable success as a niche player in this market. The group announced, at its recent results presentation, that mortgage lending at CHL had increased by 75 per cent over the same period last year. The mortgage book at CHL now stands at €3.2 billion.
Securitisation is an increasingly common way for financial institutions to raise funds - it involves them effectively selling off a stream of further interest income to investors. This is the fourth in a series of such transactions undertaken by CHP but is by far the largest to date and indicates that the group believes that it can continue to grow its loan book in the UK market. It is also the largest securitisation undertaken by the group ever.
IL&P's group finance director, Mr Peter Fitzpatrick, said that demand for the issue from Irish and European investors had significantly exceeded expectations and had allowed the funds to be raised at a keen price. He added that this "testifies to the quality of the CHL loan book".
The latest securitisation more than doubles the amount of funding which the group is getting from this area. In an investor presentation in August, it said that - at that time - total group funding from syndication was €1.1 billion.
Like most of the major financial institutions, the group has diversified its funding base considerably in recent years, with total funding at the moment standing over €22 billion. It has over €5 billion in funding from its ongoing euro medium-term note programme and more than €3 billion in commercial paper in euros and US dollars.
