Pepper breaks record with $900 RMBS transaction

Listed non-bank lender Pepper has priced its $900 million Pepper Residential Securities Trust No 18 (PRS18) RMBS issue.

The senior AAA-rated floating Australian dollar note priced at 140bps over 1m BBSW, which is 9bps lower than the equivalent PRS17 note margin achieved in October 2016.

Across all other PRS18 tranches, the pricing margins achieved were on average 10bps inside the equivalent PRS17 pricing outcomes.

Particularly strong demand from both new and repeat investors saw the transaction upsized from its original size of $600 million and the order book also needed to be heavily scaled. In creating a similar structure to PRS17, Pepper welcomed 32 separate investors from the US, Australia, Europe and Asia.

“The success of this transaction can almost exclusively be measured by the number of both existing and new investors who participated across multiple jurisdictions, including Australia, the US, Europe and Asia,” Pepper co-group CEO Patrick Tuttle said.

“From a book build perspective, we are delighted with the depth and breadth of investor engagement and support which augers well for the future success of the PRS program as we continue to grow our domestic residential mortgage volumes and remain a programmatic RMBS issuer across the global debt capital markets.”

Pepper’s Mike Culhane said that at this upsized deal volume, the transaction continues to break securitisation records both at Pepper and for the industry as a whole.

“Being a regular issuer in the securitisation market ensures that even at these record-breaking levels we can attract and retain a diverse pool of investors who see value in investing in Pepper’s regular RMBS program,” he said.

[On the Record: Mario Rehayem, Pepper Money]

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