GMAC-RFC is preparing a £1 billion residential mortgage deal to be priced later this month. Bear Stearns has been mandated as lead manager. Richard Downer, a securitization banker on the deal at Bear Stearns in London, declined to comment on any of the deal's specifics. However, market participants believe it will be a multi-currency transaction denominated in sterling, euros and dollars.
GMAC's deal comes as the pipeline for sub-prime RMBS is growing by the day. Market watchers expect deals this week from Mortgages Plc, Kensington Mortgage Company, Preferred Mortgages and Southern Pacific Mortgages, all U.K. sub-prime mortgage lenders. Including GMAC's deal, £2.35 billion of new issuance is expected.
Spreads on existing sub-prime deals have widened lately in reaction to fears the U.K. housing market might overheat. However, a recent study from Fitch Ratings says that mortgage delinquencies would have to increase dramatically and house prices would have to severely plummet for outstanding deals to be adversely affected.