Shepherd and Wedderburn advises on largest RMBS transaction since the financial crisis

Scottish law firm Shepherd and Wedderburn has acted alongside Allen & Overy on the £6.1bn securitisation of residential UK mortgages by US investment firm, Cerberus Capital Management ─ the largest residential mortgage-backed securitisation (RMBS) since the financial crisis hit in 2007.

The bonds are backed by a pool of mortgages from the legacy mortgage book of NRAM, the former Northern Rock mortgage business which was nationalised in 2008, and the transaction follows Shepherd and Wedderburn’s work on the sale of the £13bn mortgage portfolio by UK Asset Resolution to Cerberus and its affiliates in December 2015.

The transaction consists of seven rated tranches, the largest of which is a £4.7bn tranche rated AAA by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.

Partner Hamish Patrick and solicitor Neil Campbell advised Morgan Stanley (as the arrangers and joint lead managers of the RMBS) on all Scots law matters.  

Hamish Patrick commented: “The transaction is of great significance to the market. Not only is it the largest RMBS since the global financial crisis but it also demonstrates the growing market confidence in assets such as residential mortgage portfolios. We expect to see more deals like this in the near future.”

The transaction is the latest in a series of substantial residential mortgage portfolio transactions on which the Shepherd and Wedderburn banking and finance team has acted, reinforcing the continuing value and demand for such assets in the market place.