KBRA assigns ratings to Merrion Square Residential RMBS notes backed by Irish mortgages

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KBRA ratings for Irish RMBS

Highlights

KBRA Europe assigns ratings to seven classes of notes issued by Merrion Square Residential 2026-1 DAC, backed by a €623.3 million Irish mortgage portfolio as of 31 August 2026.
Collateral comprises 77.7% owner-occupied, 20.7% buy-to-let, and 5.7% non-residential properties, with loans primarily originated by Permanent TSB plc, Ulster Bank Ireland, and ACC Bank plc.
Merrion Square 2026-1 refinances assets from Merrion Square 2023-1 DAC (47.9% of pool) plus 52.1% legacy Irish mortgages, utilizing sequential payment priority and yield supplement overcollateralisation.

Transaction structure and collateral profile

As reported by KBRA, citing Kroll Bond Rating Agency, KBRA Europe assigns ratings to seven classes of notes issued by Merrion Square Residential 2026-1 DAC, a static RMBS securitisation backed predominantly by first lien, reperforming mortgage loans.

The underlying collateral consists of a €623.3 million mortgage portfolio as of 31 August 2026. Most of the loans are secured by properties in Ireland, while one property is located in England. Owner-occupied homes account for 77.7% of the collateral, buy-to-let properties represent 20.7%, and about 5.7% of the portfolio is secured by non-residential properties.

The loans were originated by a broad range of lenders, led by Permanent TSB plc with 30.0% of the portfolio, Ulster Bank Ireland with 11.1%, and ACC Bank plc with 10.8%. KBRA says many of those originators are no longer active in the Irish mortgage market.

Refinancing scope and market implications

Merrion Square 2026-1 refinances assets previously securitised in Merrion Square 2023-1 DAC, which make up 47.9% of the pool, alongside a 52.1% portfolio of legacy Irish mortgages that has not previously been publicly securitised.

The notes follow a sequential payment priority structure and benefit from yield supplement overcollateralisation and funded reserves designed to provide liquidity and credit support. The portfolio is serviced by Mars Capital Finance Ireland DAC, Pepper Finance Corporation (Ireland) DAC, and BCMGlobal ASI Limited, which together also hold legal title to the loans they service.

In our earlier coverage of Europe’s uneven growth outlook and its impact on credit conditions, we discussed how the latest IMF forecasts pointed to improving momentum in Germany and the UK, relative strength in Spain, and continued weakness in France. We also noted that persistent inflation risks, tight fiscal headroom, and shifting trade relationships were shaping borrowing conditions and investor sentiment across the region.

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