As the first full working week of the year came and went with no public ABS transactions priced, one issuer suggested looking at “the busyness of the commute” as a leading indicator of market activity.
Hungry bankers and investors will therefore be pleased to hear that, after a week of enjoying a seat on the bus, I found myself just about squeezing into an aisle on the way to work Monday morning.
So it follows that the market is now in full swing, with four transactions active by Monday lunchtime: three funding deals (discussed here) and an intriguing equity placement for Jubilee Place 7.
Santander joined them on Tuesday with a Holmes RMBS that appears to be carefully premarketed.
Euro issuers have beaten the UK primers to the punch this year, after two years of sterling grabbing a faster start.
It invites the question, could UK prime supply disappoint in 2025?
There was already £200m to make up versus 2024 before the year even began, with Nationwide’s ‘stock and drop’ scheme forcing it to tip its hand. It plans to place £1.5bn this year, down from £1.7bn last year. However, that’s before you consider the fate of Lanark, Virgin Money’s master trust, now owned by Nationwide. It issued one £500m deal in 2024 priced on January 10.
By this time last year, Lloyds and Santander had also priced trades, putting UK prime in 2025 almost £2bn down already.
But the big picture here is a quickening of TFSME redemptions — with more than £100bn to repay. At least some of that funding might need to be replaced. It’s mouthwatering in terms of potential growth for RMBS because it would only take about 10% of the 2025 TFSME maturities to double the size of the UK prime market year-on-year.
But will that happen?
For the likes of Nationwide, Lloyds or Santander, RMBS can offer nice diversification as part of a broader funding mix, but it’s a limited share of even their total wholesale funding.
Partly, at least, activity is just to keep the RMBS channel open, so probably less proportionate to any TFSME maturities they face.
We’re therefore looking to smaller issuers, who may not have been to market for a while, to step up their activity. This has been happening since 2023 (there’s an excellent chart in this story from last year proving it), with the return of all sorts of names from Aldermore Bank to West Bromwich Building Society.
Our new hire, Tom Hall, gets into the weeds of what to expect here. He has made his Another Fine Mezz debut this week, to cap a flying start to life at GlobalCapital.