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Fosse Master Issuer (82ZI)

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Tuesday 20 August, 2013

Fosse Master Issuer

Notice to Noteholders

RNS Number : 1067M
Fosse Master Issuer PLC
20 August 2013
 



Notice to Noteholders
Fosse Master Issuer plc
20 August 2013

FOSSE MASTER ISSUER PLC
(a public company incorporated with limited liability in England and Wales
with registered number 5925693)
(the Company)

NOTICE

to the holders of:
£205,000,000 Class A1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0493851298)
€775,000,000 Class A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0493852858)
£525,000,000 Class A3 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0493854631)
£389,000,000 Class Z Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0493858202)

(together, the "Issue 2010-1 Notes")

and to the holders of:
£1,250,000,000 Class A1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0525763420)
£1,250,000,000 Class A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0525763859)
£1,000,000,000 Class A3 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0525764071)
£500,000,000 Class Z Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0525764154)

(together, the "Issue 2010-3 Notes")

and to the holders of:
£675,000,000 Class A1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0538724252)
€700,000,000 Class A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0538724336)

(together, the "Issue 2010-4 Notes")

and to the holders of:
$3,000,000,000 Class A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0629516211; Reg 144A US34988WAF14)
£500,000,000 Class A3 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0629519314; Reg 144A XS0629519405)
€500,000,000 Class A4 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0629583245; Reg 144A XS0629582601)
$275,000,000 Class A5 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0630101979; Reg 144A US34988WAD65)
£250,000,000 Class A6 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0630105533; Reg 144A XS0630108800)
€275,000,000 Class A7 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0630111853; Reg 144A XS0630110707)
£965,000,000 Class Z Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0629519587)

(together, the "Issue 2011-1 Notes")

and to the holders of:
$700,000,000 Class A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0715271150; Reg 144A US34988MAV81
€100,000,000 Class A3 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0715271234; Reg 144A XS0715271408)
$300,000,000 Class A4 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0715271580; Reg 144A US34988MAW64)
$250,000,000 Class A5 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0715271663; Reg 144A US34988MAX48)
£233,965,000 Class Z Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0715271747)

(together, the "Issue 2011-2 Notes")

and to the holders of:
A$150,000,000 Class 2A1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S AU0000FOBHA4)
$750,000,000 Class 2A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784926353; Reg 144A US34988WAL 81)
£300,000,000 Class 2A3 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784926437; Reg 144A XS0785326538)
€200,000,000 Class 2A4 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784926510; Reg 144A XS0785327858)
¥16,000,000,000 Class 2A5 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784928300; Reg 144A XS0785328153)
$700,000,000 Class 3A1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784928482; Reg 144A US34988WAQ78)
£300,000,000 Class 3A2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784928649; Reg 144A XS0785328237)
$50,000,000 Class 2B1 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784929290; Reg 144A US34988WAS35)
£200,000,000 Class 2B2 Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784929530; Reg 144A XS0785328583)
£285,000,000 Class Z Asset Backed Floating Rate Notes due October 2054
(ISIN Reg S XS0784929613)

(together, the Issue 2012-1 Notes and, together with the Issue 2010-1 Notes, the Issue 2010-3 Notes, the Issue 2010-4 Notes, the Issue 2011-1 Notes and the Issue 2011-2 Notes, the Outstanding Notes),

each issued by the Company and constituted by a note trust deed dated 28 November 2006 as supplemented and amended on 1 August 2007, 20 December 2007, 23 November 2009, 11 March 2010, 21 April 2011, 6 December 2011, 27 April 2012 and 19 August 2013 between the Company and Law Debenture Trust Company of New York in its capacity as trustee for the holders of the Outstanding Notes.

1.         PROGRAMME UPDATE - AMENDMENTS TO TRANSACTION DOCUMENTS

This Notice provides a summary of the main amendments (the Amendments) made to the Transaction Documents during the annual update of the Residential Mortgage-Backed Note Issuance Programme (the Programme) of the Company. The annual update concluded on 19 August 2013 and the Amendments have come into effect on and from such date.  A full list of the Transaction Documents which were modified in this process is set out in section 2 below.

1.1       Transfer of the Funding 1 Transaction Account from Santander UK to BNY

The Funding 1 Transaction Account held with Santander UK will be closed and a corresponding new account has been opened with The Bank of New York Mellon, acting through its London Branch (BNY), appointed as "Account Bank A" under the Funding 1 Bank Account Agreement.

1.2       Panel Bank Arrangement

An arrangement (the Panel Bank Arrangement) has been introduced into the Programme, which allows the Cash Manager (on behalf of Funding 1) to deposit Funding 1's cash receipts with a panel of Eligible Banks (defined below), through the facilitation of BNY, in accordance with certain guidelines.

Pursuant to the amended and restated Cash Management Agreement, Funding 1 cash receipts (including, without limitation, all Funding 1 Revenue Receipts, all Funding 1 Principal Receipts and all amounts standing to the credit of the General Reserve Fund) are, in the first instance, paid into the Funding 1 Transaction Account held with BNY in its role as Account Bank A. All or part of such amounts may then, upon instructions provided by the Cash Manager to BNY, be deposited (a) with one or more eligible bank(s) in accordance with the Panel Bank Guidelines (as defined below), and/or (b) into the Funding 1 GIC Account held with Santander UK as "Account Bank B".

When providing instructions to BNY to deposit all or a part of amounts standing to the credit of the Funding 1 Transaction Account with an Eligible Bank, the Cash Manager is required to act in accordance with a set of guidelines (the Panel Bank Guidelines). In summary, the Panel Bank Guidelines include combinations of:

·      credit rating requirements in respect of Eligible Banks

·      concentration limits in respect of the percentage of amounts which may be deposited with one Eligible Bank and its affiliates

·      maturity requirements in respect of deposits to be made with Eligible Banks linked to, amongst other things, the ratings of the Eligible Banks.

Deposits may be made with Eligible Banks for periods of 30, 60 or 90 days (depending mainly on the rating of the relevant Eligible Bank and concentration limits referred to above) but, in any event, any such deposit period is required to mature on or prior to the immediately following Funding 1 Interest Payment Date. On such Funding 1 Interest Payment Date, the monies are returned to the Funding 1 Transaction Account for application in accordance with the relevant Priority of Payments.

The reason for the implementation of the Panel Bank Arrangement is to:

·      mitigate Account Bank replacement risk for Funding 1 if Santander UK becomes ineligible to perform its role as Account Bank by procuring in advance a number of Eligible Banks to whom the deposit can be transferred. In addition, having pre-agreed documentation and completed other operational tasks associated with opening accounts, it is believed that any foreseeable delays in transferring Funding cash receipts from Santander UK to Eligible Banks have been mitigated;

·      minimise negative carry on the cash retained by Funding 1 during an interest period by
(i) enabling Funding 1 to provide a more simplistic form of deposit to the Eligible Banks in terms of flexible maturities (including potentially beyond the replacement period applicable to a standard securitisation bank account) and the absence of explicit downgrade triggers and (ii) creating a competitive environment for a number of banks to bid against each other for Funding 1's deposits; and

·      diluting single counterparty risk by allowing the Cash Manager access to a number of alternative banks to place Funding 1's cash with during each quarterly interest period and providing the Cash Manager with the ability to keep such counterparty risk under review on a quarterly basis.

The current version of the Panel Bank Guidelines is set out in full in the amended and restated Cash Management Agreement and these guidelines may be modified from time to time by the Cash Manager provided that (i) any modifications to such guidelines are notified in advance to the Rating Agencies, Account Bank A and the Funding 1 Security Trustee; (ii) the Rating Agencies have confirmed in writing that the then current ratings of the Rated Notes would not be adversely affected by such modification; and (iii) such modification does not have any adverse effect on the security in respect of the Notes.

A further criterion for deposits with Eligible Banks is that amounts can only be used in this Panel Bank Arrangement so long as the interest or other rate of return on those deposits is equal to or higher than the Funding 1 GIC Rate or such other rate of interest applicable to any account used in place of the Funding 1 GIC Account provided that the Rating Agencies have confirmed that such other rate of interest shall not cause the then current rating of the Rated Notes to be downgraded, withdrawn or qualified. As noted above, the Cash Manager is in any event permitted under the amended and restated Cash Management Agreement to instruct Account Bank A to place all or a part of the amounts standing to the credit of the Funding 1 Transaction Account into the Funding 1 GIC Account (which account pays out the Funding 1 GIC Rate), instead of, or in addition to, the placing of a part or all of such amounts with Eligible Banks.

A bank will be eligible to participate in the Panel Bank Arrangement (an Eligible Bank) provided that (1) its unsecured, unsubordinated and unguaranteed debt obligations are rated at least A-1 short-term and A long-term (or, if such bank has no short-term rating from S&P, at least A+ long-term) by S&P; (2) its short-term, unsecured, unsubordinated and unguaranteed debt obligations are rated at least P-1 by Moody's; (3) its short-term and long-term IDR are at least F1 and A (respectively) by Fitch; (4) it is incorporated in the United Kingdom or is the United Kingdom branch of a foreign bank; and (5) has a permission under Part IV of the FSMA that includes accepting deposits under the FSMA. Eligible Banks selected by the Cash Manager and/or Funding 1 for participation in the Panel Bank Arrangement from time to time will be set out in the Eligible Bank Terms and Conditions.

1.3       Santander A-2/P-2/F2 Account and Funding 1 Loan

A further feature of the Panel Bank Guidelines is the option given to the Cash Manager to instruct Account Bank A to deposit up to 50% (or such other percentage determined from time to time, as part of a review of the Panel Bank Guidelines in accordance with the Cash Management Agreement) of "Non Bullet Funding 1 Principal Amounts" into an account held with Santander UK in the event that Santander UK's (1) short-term, unsubordinated, unguaranteed and unsecured debt obligations are rated P-2 by Moody's, (2) unsubordinated, unguaranteed and unsecured debt obligations are rated A‑2 short-term and BBB+ long-term by S&P and (3) short-term and long-term IDRs are F2 and BBB+ (respectively) by Fitch, and for so long as Santander UK maintains such rating levels and its current FSMA authorisations to accept deposits (such account with Santander UK is referred to as the Santander A‑2/P-2/F2 Account).

"Non Bullet Funding 1 Principal Amounts" constitute all Mortgages Trust Available Principal Receipts distributed to Funding 1 on each Distribution Date, but excluding (i) amounts allocated to the General Reserve Fund or the Liquidity Reserve Fund or to repay any Funding 1 Liquidity Facility Agreement and (ii) Bullet Accumulation Liability due in respect of any Bullet Loan Trance which is within a Cash Accumulation Period.

The placement of up to 50% of Non Bullet Funding 1 Principal Amounts in the Santander A-2/P-2/F2 Account is subject to the following conditions which form part of the Panel Bank Guidelines:

·      Santander UK is required to have advanced a subordinated and limited recourse loan (the Funding 1 Loan) to Funding 1 equal to such deposit on the Santander A-2/P-2/F2 Account. The advance under the Funding 1 Loan will be applied to increase the Funding 1 Share by acquiring an increased interest in the mortgages trust. The Funding 1 loan ranks pro rata and pari passu with term NR advances. The aggregate amount of Non Bullet Funding 1 Principal Amounts deposited in the Santander A-2/P-2/F2 Account is required to match the outstanding amount of the Funding 1 Loan and an increase in the Funding 1 Share;

·      Non Bullet Funding 1 Principal Amounts can only be deposited in the Santander A-2/P-2/F2 account for a period not exceeding 15 days;

·      to the extent that monies standing to the credit of the General Reserve Fund have been applied in accordance with the relevant Funding 1 Priorities of Payments, the General Reserve Fund needs to have been replenished by a corresponding amount, or, if lower, by an amount equal to the General Reserve Fund Required Amount;

·      each Note needs to have been redeemed on or prior to its Step-up Date;

·      a Non Asset Trigger Event shall not have occurred;

·      principal amounts due and payable in respect of the Class Z Notes have been repaid in full; and

·      on any Funding 1 Interest Payment date, there has not been a debit on the NR Principal Deficiency Sub-Ledger which has not been cured on such Funding 1 Interest Payment Date.

For so long as Santander UK's (1) short-term, unsubordinated, unguaranteed and unsecured debt obligations are rated higher than P-2 by Moody's, (2) unsubordinated, unguaranteed and unsecured debt obligations are rated higher than A-2 short-term and BBB+ long-term by S&P and (3) short-term and long-term IDRs are higher than F2 and BBB+ (respectively) by Fitch, the criteria relating to deposits placed in the Santander A-2/P-2/F2 Account do not apply and Santander UK is subject to the same Panel Bank Guidelines as other equally rated Eligible Banks.

1.4       Arrears Repurchase Option

The Mortgage Sale Agreement has been amended to include an option enabling the Seller to offer to the Mortgages Trustee to repurchase Loans in arrears (the "Arrears Repurchase Option"). "In arrears" is defined for this purpose as the aggregate amount overdue on a Loan being equal to or exceeding an amount equal to twice the Monthly Payment then due on that Loan. The Seller is entitled to use this repurchase option provided that the Seller Share Percentage does not drop below the Minimum Seller Share.

The amount of Loans in arrears repurchased pursuant to the Arrears Repurchase Option will be notified to the Servicer for inclusion in the monthly investor reports, which reports are available via http://www.aboutsantander.co.uk/investors/debt-investors/fosse-master-trust/2013.aspx

1.5       Additional Representations in the Mortgage Sale Agreement

The Mortgage Sale Agreement has been amended to include additional representations and warranties in respect of the Loans and their Related Security. These were included to meet certain eligibility criteria for Prime Collateralised Securities ("PCS") set by the PCS Secretariat, to enable otherwise eligible Notes issued under the Programme to qualify for the PCS label.  

As at the date of this Notice, no application has been made by the Seller for the PCS Label in relation to Notes issued under the Programme. 

1.6       Funding 1 Swap Agreement and Issuer Swap Agreements

As a result of the publication by Standard & Poor's of the document entitled "Counterparty Risk Framework Methodology and Assumptions" on 25 June 2013 detailing proposed changes to Standard & Poor's criteria for analysing counterparty risk in structured finance transactions (the "Standard & Poor's Criteria"), changes have been made to the Funding 1 Swap entered into with Santander UK as Funding 1 Swap Provider and the Issuer Swaps entered into with Abbey National Treasury Services plc as Issuer Swap Provider (together, the "Amended Swaps") in order to introduce two options (replacement options one and two), each providing different combinations of (i) ratings levels at which the Funding 1 Swap Provider or the Issuer Swap Provider is required to post collateral and (ii) amounts of collateral (by virtue of different volatility buffers) required to be posted following a Standard & Poor's rating event and to provide that the relevant counterparty may elect which replacement option will apply.

1.7       New FATCA Withholding Provisions

Provisions have been inserted in the Mortgages Trustee Bank Account Agreement and the Funding 1 Bank Account Agreement for the purpose of enabling payments to be redirected or reorganised to ensure that the relevant payments can be made without FATCA Withholding or, if such redirection or reorganisation is impractical and/or impossible, to terminate the appointment of the relevant Funding 1 Account Bank or Mortgages Trustee Account Bank by giving not less than 15 London Business Days' prior written notice (and appoint a replacement financial institution to which payments may be made free from FATCA Withholding in its place).

2.         TRANSACTION DOCUMENTS IMPLEMENTING THE AMENDMENTS

The following Transaction Documents (the Amended Transaction Documents) have been amended and/or restated or supplemented for the purpose of implementing the Amendments:

1.       Master Definitions and Construction Schedule

2.       Funding 1 Bank Account Agreement

3.       Cash Management Agreement

4.       Mortgage Sale Agreement

5.       Mortgages Trustee Bank Account Agreement

6.       Funding 1 Swap Agreement

7.       Issuer Swap Agreements (Schedules and Credit Support Annexes only) entered into between the Company and Abbey National Treasury Services plc as Issuer Swap Provider in respect of the following Series of Notes: (i) Series 2010-1 Class A3, (ii) Series 2010-1 Class A2, (iii) Series 2010-4 Class A2, (iv) Series 2011-1 Class A7, (v) Series 2011-1 Class A5, (vi) Series 2011-1 Class A4, (vii) Series 2011-1 Class A2, (viii) Series 2011-2 Class A5, (ix) Series 2011-2 Class A4, (x) Series 2011-2 Class A3, (xi) Series 2011-2 Class A2, (xii) Series 2012-1 Class 3A1, (xiii) Series 2012-1 Class 2B1 and (xiv) Series 2012-1 Class 2A4

In addition to the Amended Transaction Documents, the following new documents have been entered into to facilitate the implementation of the Panel Bank Arrangement:

1.       Funding 1 Loan Agreement entered into between Santander UK as Funding 1 Loan Provider, Funding 1 and the Funding 1 Security Trustee

2.       Eligible Bank Terms and Conditions entered into between Santander UK as Cash Manager, Funding 1 and The Bank of New York Mellon, acting through its London Branch

The Amended Transaction Documents, the Funding 1 Loan Agreement and the Eligible Bank Terms and Conditions will be available for viewing electronically by the holders of the Outstanding Notes via the following link:

http://www.aboutsantander.co.uk/investors/debt-investors/fosse-master-trust/fosse-master-trust-transaction-documentation.aspx

In addition, copies of the Amended Transaction Documents, the Funding 1 Loan Agreement and the Eligible Bank Terms and Conditions are available for inspection by the holders of the Outstanding Notes at the following office of the Principal Paying Agent.

Citibank N.A., London Branch
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LB

Capitalised terms used in this Notice shall, unless defined herein or the context otherwise requires, bear the meanings given to them in the Seventh Amended and Restated Master Definitions and Construction Schedule dated 19 August 2013 and the Sixth Amended and Restated Master Issuer Master Definitions and Construction Schedule dated 23 May 2012, which can also be viewed via the link provided above and/or obtained from the office of the Principal Paying Agent specified above.


This information is provided by RNS
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