Firstmac prices largest Australian RMBS issue since outbreak of Iran War ($2 billion)

The issue was upsized from an initial target of $750 million after strong institutional demand and priced at 1.08% over 1-month BBSW, a strong outcome in a market that has been affected by global uncertainty and a crowded issuance window ahead of the annual Global Asset Backed conference in Barcelona.

Chief Financial Officer James Austin said the result was a significant achievement in a market where many investors had become more cautious following the Iran War and its impact on confidence.

“To increase the transaction from $750 million to $2 billion in the current market is a very strong result and reflects the confidence investors have in the quality of Firstmac’s loans,” Mr Austin said.

“The Iran War has clearly unsettled markets, with some investors sitting on their hands while they reassess relative value and the broader economic outlook. Against that backdrop, completing a $2 billion transaction at a good margin is a very positive result.”

Mr Austin said the four-year structure was well received by investors because it provided greater certainty around the expected repayment profile.

“The shorter four-year duration gave investors confidence around the timing of the transaction and also fitted neatly within Firstmac’s maturity profile,” Mr Austin said.

“We saw strong support from domestic investors, along with renewed interest from offshore institutions, including investors from the UK, Italy, SE Asia and Japan.”

Mr Austin said some offshore investors had been closely examining the impact of the Federal Government’s Budget changes to negative gearing and capital gains tax for property investors.

“Foreign investors were very well briefed on the Australian market and asked detailed questions about how the Budget changes may affect property investors and lenders,” Mr Austin said.

“The fact they invested anyway is a strong vote of confidence in Firstmac’s loan book, our credit quality and the resilience of the Australian RMBS market.”

The transaction was arranged by NAB, with ANZ, CBA, DBS, Natixis, UOB acting as joint lead managers.

The latest issue brings the total amount of RMBS and ABS issued by Firstmac since 2003 to more than $62 billion.