5/26/2026
Good morning, hope you enjoyed your extended weekend. And what a weekend it was. A stupendous week, you might say, as Summer truly arrived just in time for the bank holiday, and Arsenal enjoyed their coronation as Champions of England.
I have been “joy-scrolling” (as opposed to doomscrolling) since last Tuesday night, but with plenty of ABS to cover, I had to keep that to a minimum.
In addition to the three fully marketed trades, we had two pre-placed deals and a retained RMBS, so it’s clear that things are starting to get rather busy before Global ABS in Barcelona, which is now just a couple of weeks away.
Q2 has felt very much dominated by euros and autos, but after Leeds Building Society’s Prime RMBS last week, it seems the Sterling floodgates could be opening. Mind you, Q1 was not half bad – £7.6bn of paper was close to double Q1 2025 issuance.
This week, leading the charge was Quantum Mortgages with a BTL RMBS, the £290m Bletchley Park Funding 2026-1, their third deal since debuting in 2024. Quantum's persistence in the securitization market has been rewarded, with investors clearly becoming more comfortable with their portfolio. Triple-As can move more idiosyncratically depending on market conditions, and so those were placed 3bps wide of the 2025 edition at 80bps over Sonia. But further down the stack has shown dramatic improvement, with the double-A’s coming in 20 bps tighter at 100bps over Sonia, and the single-A’s 55bps tighter than the 2024 edition.
Patience and perseverance will be rewarded in the end… just ask Mikel Arteta.
Similarly, Pepper Money's £545.2m non-conforming RMBS, Polaris 2026-2, was priced late in the day on Friday. Like Quantum, they found the triple-A’s hard work, which as we’ve covered a lot in recent weeks, can be a bit more difficult to build momentum on. But the mezz performed well with strong levels across the board.
It’s no surprise that we’re hearing whispers of a lot more UK RMBS paper to come when looking at the data below from Concept ABS. The credit curve on sub triple-A paper has flattened enormously since the LDI crisis back in late 2022. And with fewer rate cuts expected now, there may not be a better time to issue.
Almost exactly a year since it last approached accounts, specialist intermediary only BTL lender Quantum Mortgages has returned with another UK BTL rmbs from its Bletchley Park programme, offering a full capital structure. Following a Q1 of robust Sterling supply, post-Easter transactions have leaned on strong demand to print aggressively – especially at the lower ratings levels. Despite a slight wobble with the approach of Easter, UK accounts are receptive to paper even though the market is just about on track to rival the H1 placement achieved in Sterling in 2024 (which was a record post-GFC year for UK asset sales)... click here to read the full overview on Concept ABS.
After a bullish start to the year, UK ABS suffered widening into Easter – a combination of supply (Q1 ending with total placement of £7.1bn, well north of the equivalent for 2025) and the unexpected start of a middle east conflagration at the end of February eventually weighing on demand. The Sterling bid has returned with the Barcelona conference looming. Indeed, the five Sterling new issues that have marketed paper after the end of the Easter break have managed to deliver a combined £2.9bn of unfulfilled excess demand – across auto ABS, BTL and prime rmbs – the Atlas programme (Lendco BTL) finishing with c.£800m excess demand almost exactly a month ago.
Quantum's Bletchley Park, sized at c.£286m, joined a deal from specialist lender Pepper (Polaris), vying for attention in the same week. Given it's been a relatively active H1 thus far for UK BTL product – a total of £2.4bn placed YTD (incl. Bletchley), a runrate rarely matched since the GFC (excluding the years that were skewed by pre-placed bumper deals of UKAR sales) – the leads couldn't take anything for granted...click here to read the full Market Context on Concept ABS.
Elsewhere, on the regulation side of things, it appears that those in favour of greater recalibration of the EU Securitisation Framework are worried that they’ll be bitterly disappointed if the first stage of negotiations are anything to go by. We’ve seen some hand-wringing by trade associations like Paris Europlace – click here for the CEO of Paris Europlace, Olivier Vigna’s response to the reform compromises on LinkedIn.
And in addition, a report by Risk Control has been released to help make the case against “capital cliffs” that appear in the proposals. Essentially, they argue that the proposals create scenarios where a relatively small change in a rating, label (like STS), structure or eligibility status can cause a very large and sudden increase in regulatory capital or liquidity requirements. As I’m sure many readers know, there are few better when it comes to understanding regulatory impact than the team at Risk Control, led by William Perraudin.
Read it here.
And finally, a regulatory paper I can really get behind came from the UK’s PRA. Come to think of it, it’s my idea of heaven – regulation, securitization & golf… It’s a quick easy read, but what sticks out to me is the divergence, in tone as much as anything, between the EU and the UK regulators.
The nature of life as a regulator or policymaker means that no matter what happens there will always be someone moaning about something. Sometimes with justification, and often without. But in my reporting days, I heard almost unanimously from the market about how hard it was to deal with policymakers. Perhaps the most promising thing about this document is that I’m sure everyone reading it will think “I can work with these people”.
It’ll never be perfect, but credit where it’s due here. Also a fantastic way of communicating to the market and the broader public, one that tries to grasp more fully at a civil servant’s duty to explain and inform, and be held accountable for their decisions simply as a democratic principle. Read it here.
I am actually out of office today. I planned ahead that I might need this time to recover in light of the Arsenal celebrations.
I wrote on LinkedIn about my family ties to the Gunners going back to my grandfather. He was born in Highbury in the 1930’s, and wrote a book about Arsenal just before he died,titled Arsenal in the Blood. So, you can see that I never really had a choice in this addiction.
This time next week, it’s possible that I’ll have witnessedsomething no Arsenal fan had ever seen before in the form of European Cup glory.
I promise if Arsenal win the Champions League this week that from then, there will be no more football in the newsletter.
Have a great week,
Tom
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