BoB: the builders' friend
UK building societies are on the verge of using a multi-issuer covered bond structure being devised by Barclays Capital. The platform, affectionately nicknamed BoB (Builders of Britain) replicates the AyT system that gives Spain's cajas access to the cedulas sector.
This is an important development for the UK's building societies. Their mutual ownership structure precludes them carrying out securitizations because it is impossible to execute a true sale to a special purpose vehicle. This places them at a major funding disadvantage to those UK mortgage banks that enjoy public liability structures.
The introduction of structured covered bonds by HBOS two years ago placed the building societies at a further disadvantage because few of them have sufficient balance sheet size to make a covered bond worthwhile. A multi-issuer programme will enable the building societies to team up and provide enough assets to make a covered bond economic. Apparently five or six societies are already lined up.
Super Derivatives rates push
Super Derivatives has launched SD-IR, an interest rate platform aimed at providing interest rate market participants with accurate prices for plain vanilla and exotic products.