Pepper prices $600m mortgage bond

Pepper Group Limited has priced its third RMBS issue of the year following strong investor support that drove its AUD equivalent order book close to $1.9 billion.

The $600 million Pepper Residential Securities Trust No. 19 (PRS19) RMBS issue has structured its senior tranches to meet identified demand from a global investor base by issuing dual short-duration tranches denominated in US and Australian dollars.

Pepper said that the funding strategy employed with this structure has resulted in an efficient overall cost of funds for the transaction.

Pepper Group’s Australian treasurer, Matthew O’Hare, said: “Our flexibility around deal structure and commitment to being regularly in the market saw the issue attract diverse investor take-up across all tranches, with significant bids from a number of key global investors and the need to heavily scale the order book. We couldn’t be more pleased with the support shown by investors for the issue and the pricing outcome achieved.” 

Pepper Group’s Australian CEO, Mario Rehayem, said that this strong result is recognition of the quality of the non-bank’s credit standards and the long-term performance of its loan portfolio.

The CEO said: “Importantly, it affords Pepper the continuing opportunity to provide everyday Australians with the home loan financing solution that meets their individual needs, at rates which are competitive in [the] market.”

Pepper Group was assisted in this transaction by several industry entities: National Australia Bank (arranger), Nabsecurities LLC and Citigroup Global Markets Inc. (joint lead managers), and Commonwealth Bank of Australia and Westpac Banking Corporation (co-managers) on the US notes; as well as Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation (joint lead managers) on the AUD notes.

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