HREMIC Issuance Still Smashing 2014, Tops $6.5 Billion Through Q3

HREMIC issuance in 2015 continues to “smash” last year’s production, reaching $6.5 billion for the first nine months of 2015 and easily surpassing 2014’s full-year $5 billion issuance, according to a recent commentary from New View Advisors.

The issuance tally through three quarters of 2015 are even higher than the previous full-year record of $6 billion set in 2012, says New View Advisors in its commentary on the publicly available Ginnie Mae data.

There were 23 transactions underwritten by four sponsors: Nomura, Bank of America Merrill Lynch, Credit Suisse and Barclays.

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Of them, Nomura remains the top issuer for the first nine months of the year with $2.4 billion issued via eight HREMICs. This represents a 37% of market share.

Bank of America Merrill Lynch (BAML) was second with $2.2 billion issued and Credit Suisse at third with six total issuances totaling $1.3 billion. It is of note, however, that Credit Suisse issued no new securities in the third quarter, according to New View Advisors.

Rounding out the group was Barclays, which issued $611 million through three transactions for a 9% market share. Life-to-date, Barclays has issued 14% of all HREMICs, whereas BAML has issued 44% and Nomura 12%

HREMIC collateral consists of HMBS, which New View notes are Ginnie Mae guaranteed pass-through securities backed by pools of participations of HECMs.

“This double layer of government guarantee, combined with the relatively high coupon and favorable prepayment patterns of the underlying loans, results in very favorable execution, even when compared to other Ginnie Mae ‘forward mortgage’ securities,” New View Advisors writes.

Approximately 60% of outstanding HMBS securities have now been resecuritized into HREMICs, according to New View Advisors’ commentary on the Ginnie Mae data.

Read the New View Advisors commentary.

Written by Jason Oliva