UK Mortgages Ltd Investment Update - Securitisation Announcement

 
TIDMUKML 
 
UK Mortgages Ltd: Fourth Securitisation for UKML 
 
THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, 
RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED 
STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF 
IRELAND OR JAPAN. 
 
08 April 2019 
 
                             UK MORTGAGES LIMITED 
 (a closed-ended investment company incorporated in Guernsey with registration 
                                 number 60440) 
 
                           LEI 549300388LT7VTHCIT59 
 
Fourth Securitisation for UKML 
 
The Board of UK Mortgages Limited ("UKML) and TwentyFour Asset Management LLP 
("TwentyFour") are pleased to announce that Barley Hill No.2 PLC has 
successfully completed the public sale of GBP209.15mm of senior notes as 
expected. The securitisation is backed by a pool of owner-occupied mortgages 
originated by The Mortgage Lender ("TML") completed between October 2016 and 
today and purchased on a forward flow basis by UK Mortgages Corporate Funding 
Designated Activity Company ("DAC"), the Acquiring Entity in which UKML has 
invested as described in its prospectus dated 23rd June 2015. The transaction 
also contains a "Prefunding" feature which allows for further purchases of 
future completions by TML up until the securitisation's first Interest Payment 
Date in August 2019. 
 
Due to the nature of the origination of the pool, which took place on highly 
consistent basis over more than two years, the loans that were originated with 
a two-year fixed rate term are expected to pre-pay relatively quickly and 
therefore the notes were split into two tranches - GBP202.2mm of Class A notes, 
rated Aaa/AAA by Moody's and DBRS, and GBP6.95mm of Class B notes rated Aa1/AA 
(high) respectively. This allowed the transaction to more efficiently negate 
the effects of the deleveraging generated by those pre-payments, thereby 
improving returns for the Company whilst still operating within its leverage 
targets. Furthermore this deleveraging means that it would be reasonable to 
expect that the Class B notes should be upgraded to a AAA rating relatively 
quickly following the end of the prefunding period. 
 
The Class A notes were issued with a coupon of 3m GBP LIBOR plus 1.10%, with a 
2.24yr Weighted Average Life ("WAL") to the refinancing date in February 2022, 
and the Class B noted carry a coupon of 3m GBP LIBOR plus 1.60% with a 2.89yr 
WAL. This compares favourably with comparable issues. For example, Kensington 
mortgages, a lender established for over 20 years in the same part of the 
mortgage market and with considerable history as a securitisation issuer, 
placed their latest transaction in March with the Class A notes priced just 
13bps tighter than the debut issue from Barley Hill and with the Class B notes 
at the same spread. 
 
The issuer will seek Bank of England eligible status for the Class A notes. 
 
Rob Ford, Partner at TwentyFour said "We are extremely pleased with this 
inaugural transaction from our Barley Hill securitisation programme of 
TML-originated loans, and the fourth securitisation from UKML. Whilst the pool 
has taken longer than envisaged to originate, given the competitive challenges 
in the mortgage market that TML have faced since they began originating these 
loans, we have nevertheless built a high quality portfolio of loans which is 
evidenced by the exceptional performance so far and we now have a sound 
foundation to more efficiently generate further origination on an ongoing basis 
to form the collateral for future Barley Hill transactions. Furthermore, the 
securitisation and its structure more efficiently leverages the portfolio which 
will be additive to income for the Company." 
 
Silvia Piva, Portfolio Manager at TwentyFour said "Once again we are pleased to 
be able to bring a successful public securitisation to market, an inaugural 
owner-occupied deal for both UKML and TML, and backed by a high quality 
portfolio. This reinforces UKML's status as a regular issuer in the UK RMBS 
market." 
 
Further information: 
 
TwentyFour Asset Management LLP 
 
Rob Ford 
Silvia Piva 
020 7015 8900 
 
Numis Securities Limited, Corporate Broker 
Nathan Brown 
Hugh Jonathan 
020 7260 1000 
 
 
Important notice 
 
This announcement has been prepared for information purposes only, it is not a 
prospectus. 
 
The distribution of this announcement in certain jurisdictions may be 
restricted by law. Persons into whose possession this announcement comes are 
required by the UKML, TwentyFour and Numis to inform themselves about, and to 
observe, such restrictions. 
 
Certain statements in this announcement are forward-looking statements which 
are based on UKML's expectations, intentions and projections regarding its 
future performance, anticipated events or trends and other matters that are not 
historical facts.  These statements are not guarantees of future performance 
and are subject to known and unknown risks, uncertainties and other factors 
that could cause actual results to differ materially from those expressed or 
implied by such forward-looking statements. TwentyFour's estimate of the 
potential gross IRR for this investment is calculated based on certain 
scenarios and subject to certain assumptions. This and any other references 
herein to potential future returns or distributions are targets and not 
forecasts and there can be no guarantee or assurance that they will be 
achieved.  Given these risks and uncertainties, prospective investors are 
cautioned not to place undue reliance on forward-looking statements. 
Forward-looking statements speak only as of the date of such statements and, 
except as required by applicable law, UKML undertakes no obligation to update 
or revise publicly any forward-looking statements, whether as a result of new 
information, future events or otherwise. 
 
The information contained in this announcement is subject to change without 
notice and neither the UKML, TwentyFour nor Numis assume any responsibility or 
obligation to update publicly or review any of the forward-looking statements 
contained herein. 
 
Recipients of this announcement who are considering acquiring New Shares in 
UKML are reminded that any such acquisition must be made only on the basis of 
the information contained in the Prospectus and any supplementary prospectus 
(es) thereto which may be different from the information contained in this 
announcement.  This announcement does not constitute or form part of and may 
not be construed as an offer to sell, or an invitation to purchase, investments 
of any description, nor as a recommendation regarding the possible offering or 
the provision of investment advice by any party.  No information in this 
announcement should be construed as providing financial, investment or other 
professional advice and each prospective investor should consult its own legal, 
business, tax and other advisers in evaluating any investment opportunity.  In 
particular, an investment in UKML involves a high degree of risk and 
prospective investors should read the section in the Prospectus entitled "Risk 
Factors" for further information. 
 
 
 
END
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