15 February 2005 – LAWFUEL – The Law News Network – Allen & Overy has advised arrangers Barclays Capital, Citigroup and Merrill Lynch on the establishment of Northern Rock plc’s £20 billion Mortgage Backed Note Programme, Granite Master Issuer plc. The SEC registered deal was the first UK securitisation to obtain a shelf registration in the US.
The Granite Master Issuer plc securitisation restructured the existing Granite RMBS master trust, with cashflows being changed from a “capitalist” to a “socialist” model to simplify the addition of new tranches of debt from a single issuing vehicle. It also involved the creation of a new special purpose company to acquire an additional undivided beneficial interest in a pool of residential mortgage loans which backs the issuance of “de-linked” MTN-style notes. A novel aspect of this deal is the Granite Master Issuer plc’s ability to issue debt of any rating provided that the senior debt is always sufficiently supported by a requisite level of subordinated debt. This “de-linked” feature will allow Northern Rock to exploit better pricing on subordinated debt opportunistically and is a first in the UK RMBS market.
The Allen & Overy team was led by securitisation partner Angela Clist, with assistance from associate Sanjay Sethi. US advice was provided by partner Christopher Bernard and associate Daniel Rubin, whilst partner Richard Tredgett advised on the derivatives aspects of the transaction, assisted by Niharika Patel. Tax advice was provided by partner Mark Brailsford, aided by associates Adam Blakemore and Daniel Lewin. Real Estate advice was given by partner Daniel McKimm. Allen & Overy’s Trustee Group, led by Simon Hill and Malcolm Charles, separately advised the Bank of New York as Trustee.
Sidley Austin Brown & Wood advised the originator, Northern Rock plc.