Northern Rock nationalisation positive for bondholders

Holders of bonds issued by the Granite master trust will benefit from government ownership although questions remain over the vehicle's long-term future

The nationalisation of UK bank Northern Rock has raised questions over the future of Granite, the lender's securitisation vehicle. In the short term, government ownership improves the position of bondholders. But a decision to cease using the Granite master trust going forward could lead to the breach of acceleration triggers with implications for investors.

The UK government was finally forced to nationalise the bank in February after failing to secure a private sector bid for the business that