Tesco sells mortgage bond

There was good news for the global securitisation market yesterday when the supermarket Tesco sold £431m of commercial mortgage-backed securities (CMBS) supported by rental income from 12 of its UK stores and two distribution warehouses. The size of the deal, which was three times subscribed, was slightly above initial plans to sell £416m of bonds.

The single tranche, fixed-rate deal, which was described by some analysts as the first new European CMBS issue for almost two years, priced at gilts plus 330 basis points and has a coupon of 7.6 percent. Goldman Sachs was lead manager.