Castell Finance 2018-1: 04 November 2018

This will be the second public securitisation from Optimum Credit Limited. It will take the form of a standalone issuance, where the Issuer will make payments on the Notes from payments of principal and revenue received from a portfolio comprising second or subsequent ranking mortgage loans that have been originated by Optimum Credit Limited and secured over residential properties located in England, Wales and Scotland.

Optimum Credit Limited is currently one of the UK’s largest originators of second charge mortgage loans with a market share of 21.3% in March 2017. It also offers specialist servicing of second charge mortgage portfolios. OCL originates second charge mortgage loans via two channels: loan brokers and direct-to-consumer. OCL is indirectly owned by funds managed and/or advised by Patron Capital Advisers LLP.

On 5 October 2018, Immorefin S.à r.l. (which is the holding company of Optimum Holding S.A. and indirectly controlled by Patron) and Pepper Money entered into a sale and purchase agreement pursuant to which the entire issued share capital of Optimum Holding S.A. will be sold to Pepper Money conditional only on the FCA approving the change of control of OCL under section 189 of the Financial Services and Markets Act 2000.

The Provisional Mortgage Portfolio consists of 6,998 second-charge repayment loans, where the average current balance is £44,278 and the largest is for £937,990. All loans refer to owner-occupied properties, and none of the loans are self-certified. Interest rate type (by current balances): fixed 65.60%, floating 26.20% and discounted 8.20%. Product category: prime 90.0%, near prime 10.0%. Current months in arrears: 1mnth – 0.60%, 3mnths – 0.10%. Regional concentration: South East 22.9%, London 19.1%, East of England 16.2% and the South West 8.0%. The WA CLTV is 64.20% (WA OLTV was 64.60%) and the WA seasoning is 8 months.

Note that Substitution of the Mortgage Loans contained in the Mortgage Portfolio may occur in accordance with the terms described within the prospectus.


EU Risk Retention: On the Closing Date, Optimum Credit Limited (the Retention Holder) will, as an originator for the purposes of the CRR, retain a material net economic interest of not less than 5.0% in the securitisation in accordance with the text of each of Article 405 of Regulation (EU) No 575/2013, Article 51 of Regulation (EU) No 231/2013 and Article 254 of Regulation (EU) 2015/35. As at the Closing Date, the Retention will be satisfied by the Retention Holder holding an interest in the first loss tranche, represented in this case by the Class Z Notes.

US Risk Retention: The Seller does not intend to retain at least 5.0% of the credit risk of the securitised assets for purposes of compliance with the final rules promulgated under Section 15G of the Securities Exchange Act of 1934, but rather intends to rely on an exemption provided for in Section 20 of the U.S. Risk Retention Rules regarding non-U.S. transactions.

Compare/contrast: Castell Finance 2017-1, Gemgarto 2018-1 plc, RMAC No.2 plc