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Pepper prices $1bn RMBS

The non-bank has successfully priced its PRS 27 transaction, issuing $1 billion worth of bonds backed by Australian mortgages.

Pepper Group has announced that it has successfully priced its PRS 27 transaction, with its $1 billion residential mortgage-backed securities (RMBS) comprising a mix of prime and non-conforming mortgages.

According to the non-bank lender, the PRS program is designed to optimise the funding of its asset originations.

The transaction was upsized from an initial deal size of $500 million, following strong support from investors.

This pricing has followed Pepper Group’s PRS 26 pricing in June, which was a $700-million transaction.

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The transaction did not require the involvement from the Australian Office of Financial Management (AOFM), similar to the previous RMBS transaction. Nevertheless, Pepper Group Australian CEO Mario Rehayem thanked the AOFM for their willingness to participate in the transaction, and their broader support of the Australian securitisation markets.

Commenting on the RMBS transaction, Mr Rehayem said: “I am delighted that Pepper has been able to achieve this upsized billion-dollar transaction, in such short order following the completion of our last transaction, PRS 26 in June.”

“This result recognises Pepper’s reputation in the capital markets for quality underlying assets and provides Pepper with the ability to assist more customers achieve their lending goals in 2020.”

Pepper Group treasurer Andrew Twyford said a diverse group of new and existing domestic and offshore investors participated in the program.

“Pleasingly, PRS 27 was able to be executed in larger size and well within the pricing of PRS 26 even though only eight weeks have passed, underscoring the resilience of the Australian RMBS market,” he said.

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The Commonwealth Bank of Australia was the arranger of the transaction, while NAB, Westpac and Macquarie Bank acted as joint lead managers, and Citigroup Global Markets acted as co-manager.

The transaction is scheduled to settle on 18 August.

[Related: Pepper issues $750m PRS]

Pepper prices $1bn RMBS
Pepper prices $1bn RMBS
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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