ATLAS FUNDING 2025-2 PLC

Atlas Funding 2025-2 PLC is a prime UK RMBS transaction securitising a portfolio of buy-to-let mortgage loans originated by Lendco Limited. The transaction includes seven classes of floating-rate notes and two classes of residual certificates, with a significant pre-funding component to allow for the purchase of additional loans. The underlying collateral consists entirely of interest-only loans secured over residential properties in England and Wales.

Lendco Limited, an established provider of unregulated buy-to-let mortgage financing, acts as the originator and seller for this transaction. With over £2 billion in originations since 2018 and a management team boasting extensive industry experience, Lendco provides institutional-grade underwriting standards. The portfolio comprises prime buy-to-let loans, notable for being 100% interest-only, which introduces specific maturity refinancing risks, though these are mitigated by a weighted average interest coverage ratio of 177.99%. The collateral pool exhibits significant geographic concentration, with London and the South East accounting for over 76% of the portfolio. This high concentration makes the deal sensitive to regional market dynamics in these areas. The weighted average loan-to-value (LTV) is 71.42%, and the pool is very recently originated with only 3.53 months of seasoning, providing limited historical performance data for this specific pool of assets, though static data from the originator's broader books shows low delinquency rates. Structural credit enhancement is achieved through tranche subordination, surplus revenue, and the establishment of a Class A and B Liquidity Reserve Fund. A unique feature is the £74.69 million pre-funding reserve, which allows for the purchase of additional mortgage loans until February 2026, subject to strict eligibility criteria and portfolio tests. Liquidity support is robust, provided by both the internal reserve fund and a dedicated £3.438 million facility from Banco Santander. The transaction features a sophisticated hedging strategy using interest rate swaps with HSBC and Santander to manage the mismatch between fixed-rate collateral and SONIA-indexed notes. The deal includes a standard cleanup call at 10% of the initial principal and an optional redemption date in July 2030, at which point note margins step up. Risk retention is satisfied by Lendco holding 5% of each Class of Notes (excluding Class X), ensuring regulatory compliance with both UK and EU securitisation frameworks.