PTSB to sell bonds secured against €691m of mortgages

Permanent TSB plans to go to the market next week to sell bonds secured against a portfolio of €691 million of mortgage loans.

The lender has hired Citigroup, Deutsche Bank and Morgan Stanley as lead managers on the deal, which will follow an investor roadshow next week. The residential mortgage-backed securities (RMBS) are being issued by a PTSB vehicle known as Fastnet Securities 12.

This is the first public RMBS sale by the bank since November 2013. It is likely to price in the final week of this month.

Canadian debt ratings agency DBRS said in a note to clients that 92.7 per cent of the loans in the portfolio had not been in arrears in the past five years, while a further 5.4 per cent of the loans had been at least three months behind in repayments at one stage but were currently meeting their loan terms.

Positive selection

“A small proportion of the mortgage portfolio, 2.72 per cent of the loans, repays on an interest-only basis, and none of the loans are for investment properties [buy-to-let or holiday homes],” DBRS said.

“The provisional mortgage portfolio of Fastnet 12 is, hence, a relatively positive selection of loans in comparison to the mortgage portfolios of recent Fastnet transactions.”

Meanwhile, Merrion Capital said on Friday that PTSB’s chief executive Jeremy Masding emphasised at a meeting held by the investment firm this week that the lender had turned a corner to profitability after a long period of sustained losses.

PTSB reported at the end of July that it had swung into a profit after tax of €80 million in the first six months of this year from a loss of €410 million for the same period in 2015. The result, helped as the bank released €61 million of provisions put aside to cover bad loans during the crisis, was the first profit recorded by the group since 2007.

“We are confident that non-performing loans are lower than the reported 26 per cent, with many of these NPLs treated, therefore paying interest and capital on a restructured basis,” said Darren McKinley, an analyst with Merrion Capital, who rates the stock a buy.

PTSB’s shares are currently trading at €1.86, a 65 per cent discount to the price at which the bank and government sold stock in the group last year.