Paragon announces £273m mortgage scheme

SOLIHULL-based home credit and mortgages group Paragon has announced a new £273m securitisation aimed at boosting its lending programme.

The Paragon Mortgages No 18 issue is backed by Lloyds Bank, Macquarie Bank and Morgan Stanley, although the group has said final terms of the scheme have yet to be decided with the lenders and investors.

The issue comprises £238.1m of AAA rated notes at a margin of 115 basis points over three month LIBOR, £15.7m of AA rated notes at a margin of 170 basis points over three month LIBOR, £13.7m of A rated notes at a margin of 240 basis points over three month LIBOR and £5.5m of subordinated notes, which are being retained by Paragon.

Paragon will also invest £8.19m in the First Loss Fund, bringing its total investment in PM18 to £13.69m, or 5% of the issue amount
 
Paragon said the securitisation would support its on-going new lending programme.
 
The group has pledged to make a further announcement on the progress of PM18 in due course.