Re-visiting UK mortgage master trust structures I Global Securitisation and Structured Finance 2008
Figure 3: Granite Master Trust II – an example (and the first) de-linked mortgage master trust structure
Granite Finance Trustee Ltd
Single issuance series
Multiple issuance platform
Granite Finance Funding Ltd
Granite Master Issuer PLC
Issuer 1 RF
Issuer 2 RF
Source: Deutsche Bank
Shared credit enhancement
Still, two obvious benefits to date have been the reduced costs associated with no requirement to incorporate a new special purpose vehicle for each issuance and also a leaner shelf issuance documentation process, which uses a base offering circular together with a pricing supplement, the latter the only requirement for each new issuance.
currency, rating and coupon type enable the seller to maximise demand for its bonds and, therefore, both minimise cost and diversify its funding base. The minimum seller share requirement imposed by rating agencies is in place to mitigate a number of non-credit risks. These include:
Concept of the seller share The seller share is a form of overcollateralisation rather than credit enhancement and ranks pari passu with the investor share. It not only mitigates certain risks including set-off risks but, subject to size, may also facilitate the issuance of time-tranched soft bullet and hard bullet bonds. These tranches of different maturity,
borrowers offsetting deposit accounts, which are also held with the seller, against their mortgage following the insolvency of the seller; uncertainty regarding the enforceability of flexible mortgages; and the possibility of the lender being unable to make further advances on flexible mortgages following insolvency.
Global Securitisation and Structured Finance 2008