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Pepper completes $300m RMBS issue

Pepper completes $300m RMBS issue

Pepper has successfully completed a $300 million non-conforming RMBS issue with help from three of the big four banks.

A total of 12 investors participated in the transaction, which was confirmed by Pepper as well as joint managers CBA, Westpac and NAB.

The transaction is Pepper’s second public non-conforming RMBS issue for 2015, having previously raised money in June.

Pepper co-group CEO Patrick Tuttle said he was pleased with the pricing execution and strong level of domestic investor support for the transaction “amidst the backdrop of recent spread widening experienced by a range of bank issuers”.

“Pepper is committed to issuing its paper in both the domestic and international debt capital markets on a programmatic basis,” he said.

“This reflects the confidence we have in the credit quality of our underlying mortgage collateral and our ability to achieve best-in-market execution, regardless of market conditions.”

Pepper’s treasurer Todd Lawler said that given the market conditions when the transaction was planned, the group decided to utilise a structure with a short-dated tranche to manage overall cost and ensure robust liquidity at launch.

“We are very happy that the market responded positively to these structural enhancements and are pleased that we have the flexibility to meet changing market needs,” he said.

In addition to the raising, Standard & Poor’s (S&P) has reaffirmed Pepper’s non-conforming and prime servicer rankings as “strong”.

S&P said the rankings reflect its view that Pepper continues to be a high-quality servicer of residential mortgage assets.

Mr Tuttle said the rankings reinforce Pepper’s position as a pre-eminent servicer in the Australian mortgage market, “as reflected by the strong performance track record of the Pepper Residential Securities program since its inception in 2003”.

Pepper completes $300m RMBS issue
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