Dilosk raises cash pile for new buy-to-let loans
New lender Dilosk has reopened the market for Irish mortgage securitisation with a €206m bond deal.
The debt is secured against a portfolio of ICS Irish home loans bought last year from Bank of Ireland. The funds raised will be used to finance new lending for the buy-to-let market here. Dilosk expects to start lending towards the end of this year.
Dilosk will pay interest ranging from 0.80pc over the standard euribor rate on the bulk of the debt to 2.20pc over the market standard rate on a small slice of riskier bonds.
It is the first AAA rated mortgage backed issue by an Irish financial institution in eight years.
Securitisation deals are often complex debt structures that allow companies to raise cash against pools of loan assets. Interest paid to investors varies on their rank in the structure, with riskier bonds commanding higher returns.
Dublin-based Dilosk will retain a slice of the financing deal, but the bulk of the bonds have been issued to investors and are rated from AAA to BBB, by rating agencies Standard & Poor's and DBRS.
Deutsche Bank arranged the deal, which may pave the way for further securitisations as the market stabilises.
Dilosk will be the first new lender in the market since the crash. It was approved as a lender by the Central Bank last year.
The mortgages backing the new bonds are mainly high quality home loans, not buy-to-lets. Less than half of 1pc of the portfolio of 1,900 mortgages are in arrears, and a similarly tiny share of the loans are in negative equity.