Credit Suisse Group AG (CSGN) sold securities tied to new U.S. home loans without government backing in its third deal of the type in 2012, as issuance accelerates after remaining all but frozen for four years.
Almost $330 million of bonds were created in the securitization of prime fixed-rate jumbo loans, with Standard & Poor’s assigning top grades to $310.5 million, the ratings firm said in a statement. The transaction priced today, according to a person familiar with offering who asked not to be identified, citing a lack of authorization to speak publicly.
Credit Suisse teamed with Chimera Investment Corp. (CIM:US) on a $741 million deal in March to join Redwood Trust Inc. (RWT:US) as the only issuers of so-called non-agency securities backed by new U.S. mortgages since the market collapsed in 2008 amid soaring defaults and plunging real estate values. Transactions in recent years have been tied to better-quality loans.
The pool of loans in today’s deal “contains borrowers with a median multiple of liquid cash reserves to current mortgage payment of 36 times,” S&P said, referring to the ratio between homeowners’ assets such as money in the bank and housing bills.
Similar to Credit Suisse’s March transaction, the names of a $425 million deal in June by the Swiss bank and today’s offering also contain the letters CIM, matching the stock ticker of Chimera. Fitch Ratings had said Chimera bought the junior- ranked slices of Credit Suisse’s initial securitization.
Katherine Herring, a spokeswoman for Credit Suisse in New York, declined to comment, as did Jay Diamond, a spokesman for Chimera, a New York-based real estate investment trust that’s run by a unit of Annaly Capital Management Inc. (NLY:US)
Redwood has done six deals this year, packaging a total of almost $2 billion of loans into securities, following $909 million in 2010 and 2011, according to data compiled by Bloomberg. Non-agency issuance peaked at $1.2 trillion in each of 2005 and 2006.
Credit Suisse’s DLJ Mortgage Capital acquired the loans bundled into the securities sold today under a program in which it buys debt on a loan-by-loan basis, S&P said. In previous deals, it had also used mortgages sold in bulk by MetLife Inc. as the insurer retreats from banking.
The originators of the loans included Caliber Funding LLC, Quicken Loans Inc. and PHH Mortgage Corp., according to a separate S&P report about the contractual promises they made about debt quality.
Jumbo mortgages are those larger than allowed in government-supported programs, currently as much as $729,750 for single-family properties in some areas. Limits range from $417,000 to $625,500 for Fannie Mae and Freddie Mac loans with the lowest costs for borrowers using 20 percent down payments.
To contact the reporters on this story: Jody Shenn in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Alan Goldstein at email@example.com