BREAKINGVIEWS-UK stimulus gives securitisation a good kick

By Neil Unmack

LONDON, Oct 9 (Reuters Breakingviews) - The Bank ofEngland's funding for lending scheme makes it easier for banksto push cash into the UK economy. But by soaking up issues ofhigh grade mortgage-backed debt, it is helping the rebirth ofmore esoteric securitisations. It's a benevolent, albeitunintended, consequence.

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- Citigroup expects issuance of bonds backed by primemortgages to fall to 8 billion pounds in 2013 as a result of theBank of England's funding for lending scheme. The bank had beenexpecting issuance of 25-30 billion pounds without the scheme.

- The funding for lending programme allows banks to offercheaper loans to consumers and companies because lenders can useless risky mortgage bonds to obtain finance from the Bank ofEngland at very low rates.

- Spreads on top-rated bonds backed by high quality UKmortgages have halved in the last three months to 60 basispoints from 120 basis points, according to Deutsche Bank AG.

(The author is a Reuters Breakingviews columnist. The opinionsexpressed are his own)

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(Editing by Robert Cole and David Evans) ((neil.unmack@thomsonreuters.com))