Credit Suisse Group AG (CSGN) completed the fifth bond deal this year tied to new U.S. home loans without government backing amid a renewed slowdown in the market, according to ratings firm DBRS.
The securities are backed by 364 loans with $271.7 million of balances, the credit grader said today in an e-mailed statement. Most of the notes in the transaction, named CSMC Trust 2014-IVR2, were granted AAA rankings. Invesco Mortgage Capital Inc. (IVR), a real-estate investment trust, has purchased the junior-ranked notes in previous non-agency deals with names containing IVR, its stock ticker symbol.
Drew Benson, a Credit Suisse spokesman in New York, and Bill Hensel, a spokesman for Atlanta-based Invesco, declined to immediately comment.
The non-agency market has contracted as banks seek jumbo mortgages to hold as investments and bond buyers demand higher relative yields, after showing signs of reviving from its paralysis following the 2008 financial crisis. Issuance has also been restrained by investor distrust of the debt and competition from government-backed programs.
While total issuance of non-agency securities tied to new loans jumped to $13.4 billion last year from $3.5 billion in 2012, the sales collapsed after September, according to data compiled by Bloomberg. Less than $1 billion of the deals were completed from October through December, and issuance now totals about $1.6 billion this year.
Sales peaked at $1.2 trillion in both 2005 and 2006.
BMI Residential Mortgage Loan Trust, an entity managed by BlackRock Inc. (BLK), sold 26 percent of the loans to the Credit Suisse unit that created the latest securities, according to DBRS.Tara McDonnell, a spokeswoman for New York-based BlackRock, declined to comment.
Jumbo mortgages are those larger than allowed in government-supported programs, currently as much as $729,750 for single-family properties in high-cost areas. Limits range from $417,000 to $625,500 for Fannie Mae and Freddie Mac loans with the lowest costs for borrowers using 20 percent down payments.
To contact the reporter on this story: Jody Shenn in New York at firstname.lastname@example.org