Non-bank issues new $350m RMBS

Bluestone has announced that it has priced its third securitisation in 2018 with a $350 million Sapphire XX 2018-3 residential mortgage-backed security (RMBS) issuance.

According to the non-bank, the transaction also marks the first calls of post-GFC issued securitisations offered by Bluestone on their first possible call dates, with the pools from both Sapphire XII 2013-1 and Sapphire XIII 2014-1 being refinanced into the transaction alongside newly originated loans.

Bluestone CEO Campbell Smyth noted the lender’s achievements since it was acquired by Cerberus Capital Management in April 2018, adding that Bluestone’s growth was also attributable to a void in the market left by major lenders.  

However, Mr Smyth stressed that the non-bank is committed to lending responsibly amid weakness in the housing market.

“We are focused on writing loans responsibly for borrowers who don’t meet the criteria of mainstream lenders, a space which is only growing with the pull back by the majors,” he said.

“This is not, however, a time to be loading up on risk in portfolios. Although the Australian consumer continues to perform strongly, we are seeing weakness in the underlying residential property market and are preparing for this to continue for some time.”

Mr Smyth continued: “As such, Bluestone is focused on continuing to make the hard decisions that it will look back on in years to come and be thankful they were made.

“The conservative portfolios that we have been building give us comfort heading into a time of more price volatility. Although tempting, we have resisted the lure of moving into some of the more risky areas and have in fact been making the most of the opportunity to incorporate increasing volumes of prime and near-prime borrowers at sensible [loan-to-value ratios].”

Bluestone noted that the newly issued RMBS has a weighted average LVR of 65.64 per cent with 11.83 per cent of borrowers over 80 per cent.

According to Bluestone, the transaction also contains a greater amount of seasoning due to the inclusion of loans refinanced from the called transactions, with a weighted average seasoning of 49.22 months.

The non-bank added that the transaction was entirely placed with real money accounts without the need for bank support in any tranche.

Todd Lawler, Bluestone’s recently appointed CFO, commented: “It is great to see the level of investor demand for our transactions.

“While it is comforting to know that banks are there to support us, it is great to see the whole capital structure being placed with real money accounts.

“Going forward, the growth in origination will be supported by increased and diversified capital markets activity, with additional warehousing capacity, global risk retention compliant securitisations and other forms of term financing.”

Bluestone noted that it expects to return to the market in the first quarter of 2019 with Sapphire 2019-1 and anticipates two to three transactions over the coming year.

The transaction marks Bluestone’s 27th RMBS issuance and 20th under its Sapphire program in Australia.

Bluestone’s latest issuance follows the announcement that the non-bank recorded $2 billion in settlements since returning to the market in 2013.

[Related: Non-bank to roll out ‘green mortgage’ scheme]