Non-bank completes $2bn RMBS issue

Firstmac has completed a $2-billion residential mortgage-backed securities (RMBS) issue, the largest RMBS issue set by a non-bank. The mortgage lender had initially set the record in 2017, when it issued a $1.77-billion RMBS. 

According to the non-bank lender, it paid a margin “above the bank bill rate of just 73 basis points” on the RMBS bonds, which it said was “the tightest margin paid by any non-bank since the GFC” (in 2007).  

Firstmac’s chief financial officer, James Austin, said the issue was supported with commitments from existing and new investors.

“As well as commitment from our regular investors, it has been phenomenal to see that we have attracted many new investors, some of whom have not previously bought any non-bank RMBS at all,” Mr Austin said.

“Firstmac’s proven track record as a strong sustainable business has been the main contributor to this milestone deal.”  

Twenty-nine institutions invested in the issue from all major markets, including Australia, Japan, South-East Asia, Europe and the United States.

According to the non-bank, the institutions recognised the non-bank for its “premium credit, arrears that run well below banks, and an engaged investor relations program”.

The lender, which manages approximately $13 billion in mortgages, said “much of its success is owed to its strong broker introduced business” as well as its retail arm online lender loans.com.au. 

Speaking to Mortgage Business, Mr Austin added that the new funding would enable Firstmac to “compete even harder against the banks in the coming year”.

He said: “Expect our loans to be competitively priced with some interesting new products also on the way in the near future.”

The transaction was arranged by Australia and New Zealand Banking Group, along with joint lead managers National Australia Bank, Standard Chartered Bank, and SMBC Nikko Capital Markets Ltd. 

In total, Firstmac has now issued $32 billion in bonds since starting its RMBS program in 2003. 

It comes as swathe of non-banks, including Pepper, BNK, Resimac and RedZed, have looked to gain funds for expansion by issuing large RMBS in recent months, which are being snapped up by hungry investors.

Moreover, several non-banks have also looked to monopolise on strong investor appetite by listing on the ASX, with Latitude Financial recently listing and expectations rising of an imminent Pepper Money IPO.

[Related: Pepper issues second RMBS for 2021]