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Pepper Money Limited (Pepper) has priced a $750 million residential mortgage-backed security (RMBS), its third non-conforming PRS deal for 2022.
PRS 34, which will settle on Thursday (13 October 2022), takes the total amount of funds that the non-bank lender has raised this year to $5 billion.
The latest round will “optimise the funding of its Australian mortgage originations”, according to the lender.
It builds on a previous 1.25 billion RMBS — which had been upsized from $650 million, earlier this year.
Commenting on the transaction, Pepper Money’s chief executive Mario Rehayem said: “This is our seventh public securitisation in 2022, bringing the total funds we’ve raised year-to-date to A$5.0 billion.
“Our ability to continue to raise funds despite the recent tougher market conditions reflects debt investor confidence in our capacity to manage throughout the economic cycle and our strong performance track record.”
The lender’s treasurer Anthony Moir added: “Since 2003 we have completed 54 securitisation transactions raising over $33 billion via our four programs, Pepper-Prime, PRS, Pepper-Social and SPARKZ.
“The strong ongoing support from debt capital market investors over the past two decades for both Pepper Money’s prime and non-confirming issuances demonstrates the strength and longevity of our relationships and our ability to continue to fund Pepper Money’s sustainable growth regardless of market conditions.”
National Australia Bank (NAB) is the arranger and joint lead manager, while Commonwealth Bank of Australia (CBA), Macquarie Bank Ltd and Westpac Banking Corporation (Westpac) are all joint lead managers.
Earlier this year, the non-bank lender outlined that margins paid to investors on securitisations had been increasing recently, with Pepper having paid around 75 bps to 1 per cent to investors last year, which had quickly risen this year. In August, the margin paid was around 1.75 bps, Mr Moir revealed. However, he outlined that he expected the cost pressures to normalise in the next six months, with 2023 expected to be “a period of normality”.
It has also recently been changing its commercial lending structure, as it “doubl[es] down its focus on supporting the commercial lending growth” and broker offering.
Ben McKell, Pepper Money’s senior commercial business development manager (BDM), recently stepped into the new position of national sales manager, commercial, following the departure of the former head of commercial mortgages, Mal Withers (now at Prime Capital).
In his new position, Mr McKell is focused on continued growth in commercial lending and building strong broker and aggregator partnerships.
The lender said it was investing in its business development managers (BDMs) to be “skilled at providing a holistic approach at understanding their brokers business, leveraging [Pepper’s] data and experience in specialist and SME lending”.
Pepper Money has also announced the creation of new commercial relationship manager roles, which will focus on supporting the growing number of brokers writing commercial loans. The new positions have been created following “broker feedback”, the lender said.
[Related: Funding cost pressures should ease by 2023: Pepper]
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