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Pepper prices first $1bn RMBS

Pepper prices first $1bn RMBS

The non-bank lender has priced its first $1 billion residential mortgage-backed security, driven by strong demand.

The group’s first $1 billion RMBS issue, Pepper Residential Solutions Trust No. 20 (PRS20), attracted strong over-subscription, exceeding $2 billion.

Pepper noted that it achieved the milestone despite competitive pricing in a market experiencing “increasing global volatility”.

The transaction comprised of several tranches, ranging from a $300 million AAA-rated tranche priced at $1 million bank bill swap rate (BBSW) plus 120 basis points.

“As our first billion-dollar securitisation, this is a real milestone for everyone at Pepper,” Pepper Australia CEO Mario Rehayem said.

“This transaction is a strong endorsement of Pepper’s business, its loan quality and expertise as a lender to the many customers who are underserved by the banks,” Mr Rehayem said. 

Pepper group’s Australian treasurer, Matthew O’Hare, attributed the growth to increased investor activity, a growing offshore investor presence and the diversification of Pepper’s investor base. 

“The efforts we have made to broaden our investor base has paid off with new investors across every tranche and an ever-increasing offshore investor presence evident in this transaction,” the treasurer said. 

“Importantly, we have attracted a significant number of new ‘real money’ investors, further diversifying our investor base.

“We are truly delighted with the support shown by our many valued Australian and offshore clients and with the addition of four new investors to our program.”

National Australia Bank (arranger) and nabSecurities LLC, Citigroup Global Markets Inc (joint lead managers), the Commonwealth Bank of Australia and Westpac Banking Corporation (co-managers) assisted the transaction on the US notes. CBA, NAB and Westpac (joint lead managers) also assisted on the AUD notes.

The RMBS transaction will be settled on 28 March.

Since inception, Pepper has issued over AUD$11.6 billion of RMBS across 26 non-conforming and prime RMBS issues.

[Related: Pepper-backed offshore lender launches non-resident mortgages]

Pepper prices first $1bn RMBS
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