Second Bellemeade deal of 2021 in the market, pricing soon

Arch is currently in the market its second mortgage insurance-linked note (MILN) of the year, and the trade is expected to price tomorrow or Friday, say sources.

The transaction, dubbed Bellemeade Re 2021-2, should close next week or the week after.

Overall deal size is expected to be around $500m, and it will consist of five tranches: the M-1A M-1B, M-1C, M2 and B1. The M-1A is usually the largest tranche in deals of this kind

As with the past four or five Arch MILN deals, this issue is paired with reinsurance, which is expected to be around $100m.

The borrower declined to comment on the trade until pricing, but sources close to it say that investor demand is as robust as seen for any MILN deal in the last five years or more. This would suggest that the market is back to where it was before the Covid 19 crisis hit.

There have been six MILNs priced this year from MGIC Corporation, Genworth, Arch , Radiant and National Mortgage Insurance Corporation. April proved an especially busy month with three trades from Radiant, Genworth and  National Mortgage Insurance Corporation.

Arch’s deal of the year was the five-tranche Bellemeade Re 2021-1 priced in March. The six-tranche deal came in at $500m and was the first Bellemeade trade to be priced against SOFR, rather than Libor.

Originally, this deal also incorporated a $80m unrated B-2 tranche but this was dropped. An additional $64m of reinsurance was secured alongside that trade.

Arch issued four Bellemeade deals in 2020, including the re-opening of the sector in June after the Covid shutdown.

Simon Boughey