Firstmac Completes $500 Million RMBS Issue
The deal compares favourably with recent issues including a major bank issue at +140 points and a non-bank lender at +155 points.
Firstmac CFO James Austin said the success of the deal reflected the confidence of major institutional investors in the quality of Firstmac’s online loan book, its tough credit policies and its effective self-regulation.
“The RMBS market is functioning well but spreads are wider than six months ago and investors remain relatively cautious,” Mr Austin said. “Despite this, we have been able to tap the market at a narrower than usual gap to the majors due to institutional support for our high-quality book, tight credit policies, and continued lending discipline.”
The transaction takes Firstmac’s RMBS issuance since 2003 to more than $16 billion. Its most recent prior issues were a $500 million issue in November 2015 and $1 billion in May 2015.
Mr Austin said the issue had been well supported by domestic investors, with a total of xx investors participating in the transaction including xx real money accounts and jointly led by Australia and New Zealand Banking Group, and National Australia Bank. In a new development, Singapore based DBS Bank Limited acted as co-manager.
The Firstmac Mortgage Funding Trust Series 2-2016 was successfully placed and priced in a deal arranged by Westpac Institutional Bank.
This culminated in a fully tranched capital structure where:
1. the Class A-1a notes, $405 million rated AAA by S&P and Fitch, benefit from 15% credit support and with a weighted average life of 3.0 years, priced at 1M BBSW +1.50%;
2. the Class A-1b notes, $20 million rated AAA by S&P and Fitch, also has 15% credit support and with a weighted average life of 3.7 years, priced at 1M BBSW +1.50%;
3. the Class A-2 notes, $35 million rated AAA by S&P and Fitch, has 8% credit support and a weighted average life of 3.8 years, priced at 1M BBSW +2.10%;
4. the Class B notes, $26 million AA rated by S&P with a 5.1-year weighted average life, priced at 1M BBSW +2.50%;
5. the Class C notes, $6.5 million A rated by S&P with a 5.1-year weighted average life, priced at 1M BBSW +3.25%;
6. the Class D notes, $5.5 million rated BB by S&P with a 5.1-year weighted average life, priced at 1M BBSW+6.00%; and,
7. the Class E notes for $2.0 million were retained by Firstmac as a demonstration of confidence in the credit quality of the online originated loans.
Firstmac Limited is Australia’s largest non-bank lender, with more than 35 years’ experience in home loans. Firstmac has written in excess of 84,000 home loans in the past decade and manages approximately $8 billion in mortgages and $250 million in cash investments. Firstmac is a premier sponsor of the Brisbane Broncos.
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