iscover
Upsized from $650 million, the $1.25 billion raising — Pepper Prime 2022-2 Trust — is the lender’s sixth public securitisation transaction completed this year.
The latest transaction has brought Pepper Money’s total amount accrued year to date in the securitisation markets to $4.3 billion.
Pepper Prime 2022-2 Trust is set to settle on Thursday (8 September 2022).
The non-bank lender extended its thanks to NAB — the arranger and joint lead manager — and ANZ, CBA, SMBC Nikko Capital Markets Limited and United Overseas Bank Limited, Sydney branch for their work as joint lead managers.
Pepper Money’s chief executive Mario Rehayem stated the “very strong demand” for this deal and its capability to upsize the raising were a “testament to the strength and resilience of Pepper Money’s funding programme”, despite recent market volatility.
“Since 2003 we have raised more than $32 billion through 53 transactions via our four programs, Pepper-Prime, PRS, Pepper-Social and SPARKZ,” he said.
“The depth and breadth of our relationships with both domestic and global debt investors enables us to continue to raise funds throughout economic cycles regardless of market conditions and ensures we are well funded to continue to deliver sustainable and profitable growth.”
Treasurer of Pepper Money, Anthony Moir, added: “Our strong track record in raising funds from debt capital markets is indicative of the long-standing relationships and support we have developed over nearly two decades and across a diverse investor base.”
Indeed, the transaction comes despite Pepper having recently flagged that funding costs had been changing.
Speaking at the Pepper Insights Live event in Sydney in July, Mr Moir told broker delegates that “funding costs are going through the roof” as the cost of money rises.
He noted that, while the “price of money” had been low over the past two years (as the base rates were pushed down and margins being paid to investors were low), this has been rising rapidly, with both banks and non-banks feeling the squeeze.
For the banks, the maturation of the cheap funding offered from the Term Funding Facility is resulting in higher costs, while for non-banks, the margin paid to investors being securitised debt was increasing.
However, he added that while this had been a “pretty significant increase”, he expected levels to “stabilize and come down” in the next six months after a period of “craziness”.
He concluded: “Interest rates are going up, property prices are going down, but hey, we’re just transitioning back to normal levels, pre COVID.
“We’re seeing funding costs pressures, but from my perspective it’s good that this is going to happen quick. We’re going to normalise quick and we will be out of it quick. So 2023 should be a period of normality, rather than what we’re seeing today, which is a little bit of a period of craziness.”
[RELATED: Pepper prices latest securitisation at $500m]
ISCOVER 
