18 March 2021
Clifford Chance advises on first social RMBS to comply with new ICMA social bond guidelines
International law firm Clifford Chance advised Lloyds Bank Corporate Markets Plc as Arranger and Lloyds, BNP Paribas S.A. and National Australia Bank together as Joint Lead Managers on the first social residential mortgage-backed securitisation (RMBS) in the UK. This a RMBS of a fully owner-occupied mortgage portfolio originated by specialist mortgage lender Kensington Mortgages and involved the issuance of GBP 500m floating rate notes issued by Gemgarto 2021-1 PLC as the Issuer. The Class A Notes issued were rated AAA by both Fitch and DBRS and the transaction priced at +59bps over SONIA reflecting a positive market outlook despite the situation brought on by coronavirus.
The transaction was a landmark transaction because it was the first RMBS transaction to be structured to comply with the International Capital Markets Association's Voluntary Process Guidelines for issuing social bonds published in June 2020. Kensington Mortgages has developed a framework which looks to originate mortgage loans to applicants who are underserved by high street lenders and thereby directly contributing to improving access to banking services and socioeconomic advancement and empowerment through equitable access and control over such assets. The issue of the notes by the Issuer and the associated purchase of the mortgage loans comprised part of the funding arrangements by Kensington Mortgages for such a social project.
The Clifford Chance team based in London was led by partner Christopher Walsh together with partner Anne Drakeford, partner Chris Davies, senior associate Theodoros Kotsiras and associate Purvi Doshi.