HREMIC Issuance 2015 First Half – Nomura Eclipses BAML for #1

HREMIC issuance for the first six months of 2015 was $4.27 billion, 85% of 2014’s full year $5.05 billion.  There were 15 transactions underwritten by three sponsors, Nomura, Bank of America Merrill Lynch, and Credit Suisse. Nomura captured the #1 slot for the first half, ending Bank of America Merrill Lynch’s nearly 6-year reign as #1 by just $16 million in the half.  Nonetheless, life-to-date BAML has issued 45% of all HREMICs, while Nomura has issued 9% life-to-date.  Credit Suisse was the third underwriter with 6 issuances totaling $1.33 billion.  Credit Suisse has issued a little less than 6% of all HREMICs life-to-date.

Issuance in 2015 is on pace to smash through 2012’s record $6 billion of HREMIC issuance.  BAML’s $730 million 2015-H13 transaction was the largest HREMIC ever issued.  Approximately 57% of all HMBS have now been resecuritized into HREMICs.  While there have been a total of 14 different HREMIC issuers since 2009, with RBS dropping out of the business, this is the first time just 3 dealers represented 100% of HREMIC issuance.

HREMIC collateral consists of HMBS, which are Ginnie Mae guaranteed pass-through securities.  HMBS are backed by pools of participations of HECMs, which are FHA-insured reverse mortgages.  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 compiled these rankings from publicly available Ginnie Mae data.

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