New type Mortgage Bond launched by Dynamic Credit

Dynamic Credit publiceert op haar website:

“The Dutch financial markets regulator, AFM, has approved the prospectus for the Dynamic Credit Mortgage Bond programme. Through this, a new way of funding Dutch mortgage loans is officially ready for use

It is now possible for institutional investors to invest in a portfolio of Dutch mortgage loans in a simple, transparent and low cost way. The Mortgage Bond will appear as one line in the administration of an investor and can easily be settled. Listing on a stock exchange is optional and can be achieved in a straightforward way. Because of these attributes, the Mortgage Bond will radically change the way Dutch mortgage loans are funded.

Unlike a securitisation, which normally has an effective life of 5 year, the Mortgage Bond provides financing for the whole duration of the loan. And whereas an investor effectively cannot get out of a mortgage fund, the Mortgage Bond can be traded and settled in an easy way. Investors can thus get the exposure they want and then change that exposure when they like to do so.

The way the Dynamic Credit Mortgage Bond works is straightforward: an investor can choose which segments of the mortgage market (combinations of risk classes and fixed rate periods) they want to invest in. Through the bijBouwe label these loans are then originated. Alternatively, an existing portfolio of bijBouwe loans can be bought from another investor. The loans will then be put into a separate compartment of DCMB Programme BV, a dedicated bond issuing entity. Notes are then created on just this compartment. This way investors can get the exposure they want, in a simple and transparent investment product. Interest and principal payments on the portfolio of mortgage loans are passed through to the Mortgage Bond holders.

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Fixed income - Mortgages

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