Prudential to sell $5 billion in servicing rights.

Prudential Home Mortgage, seeking to turn an asset into hard cash, is preparing to sell a $5 billion chunk of its $77 billion servicing portfolio.

This is a new tack for Prudential, according to Thomas Wind, senior vice president of risk management at the Clayton, Mo., mortgage lender. Well-capitalized mortgage services like Prudential have generally sought to build up servicing portfolios in order to generate maximum economies of scale.

The mortgage lending arm of giant Prudential Insurance recently announced that it was laying off 600 of its staff.

Prudential makes the move, according to Mr. Wind, partly because a runup in interest rates has raised the value of lower-coupon servicing rights.

If a servicing right has a coupon that is below prevailing rates, it is less likely to refinance, and thus will provide cash flow for a longer time.

The package of servicing, a mixture of government insured and conventional loans, has a weighted average coupon of 7.37%, well below current rates.

Servicing prices have been under pressure in recent months, partly, experts say, because the refinancing bust has caused some companies to cash in on servicing to bolster profits.

Cohane Rafferty Securities, Inc., Harrison, N.Y., is handling the offering.

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