Blackstone majority owned Australian portfolio company and $12 billion AUM asset manager La Trobe Financial announced that on the 4 May it successfully priced its first Residential Mortgage Backed Securities (“RMBS”) transaction for 2021 – a $1.25 billion RMBS issuance, supplementing its unique and diverse funding program.
La Trobe Financial was able to complete the transaction with repeat support from domestic and global investment houses. Once again, support was seen across the structure with all notes over-subscribed and pricing outcomes that have not been seen in the sector since the global financial crisis (GFC).
La Trobe Financial’s CFO Martin Barry stated, “We are very pleased with the post-GFC record pricing this transaction has achieved in a market against a global backdrop of uneven recovery from the pandemic. This $1.25 billion issuance continues to expand our already-strong RMBS funding channel comprising of some 52 active holders of our paper; the issuance was 1.5x overbid. The 2021-1 bids also confirm the strength of our RMBS program, business platform and the quality of underlying assets. La Trobe Financial has co-invested alongside investors and currently holds $460 million of shock absorber and regulatory capital.”
Greg O’Neill, President and CEO at La Trobe Financial, commented, “This is our 12th successful issuance to market since 2014 that sits alongside over $30 billion of fully repaid term debt and warehouse funding lines since inception in 1952. RMBS is one of our important funding channels to the business and this new funding will continue to support underserved borrowers as the Australian economy rebounds from COVID-19.”
The underlying mortgage pool is consistent with prior high-quality issuances from La Trobe Financial consisting 68% to self-employed borrowers, a traditionally under-served, yet high quality component of the mortgage market. Weighted Average Loan to Value is 71% with no loans approved at greater than 80% loan to value. Super-prime SMSF investment loans comprised 14% of the pool and 92% of the pool has nil prior credit events.
Chris Andrews, Deputy CEO and Chief Investment Officer at La Trobe Financial, added, “The pricing and order book reflects a strong endorsement of La Trobe Financial’s high quality assets, expertise and long, consistent, track record as Australia’s oldest diversified asset manager. With the current trend of loan originations now at $12+ billion per year, this issuance complements our current institutional mandates and our nationally and internationally awarded $6 billion retail Credit Fund. We have built a disciplined investment and funding strategy and continue to deliver an outstanding value proposition for our investors that will see the business continue to grow.”
CFO Mr Barry further commented, “The proceeds of the issue will be used by La Trobe Financial to continue writing home and business loans for everyday Australians at a critical time in the history of our economy. We welcomed a significant large global investor to our existing 52 investor-strong RMBS program and are delighted by the interest we have received both offshore and domestically as we build out our diverse global investor base.”
“With this RMBS transaction we achieved our goal of industry-leading pricing, notwithstanding increased levels of market supply and note participation from a select group of chosen investors comprising ten domestic, five from Asia, five from the United States and two from Europe or the U.K.” he added.
With $12 billion of assets under management, La Trobe Financial has been responsible for over $67 billion worth of asset originations since being founded in 1952. The company has now issued $7.92 billion of RMBS to a range of Australian and international investors. Its RMBS program has seen continued support from repeat investors and a progressively widening investor base with each transaction. Both reflect well on the diversity and resilience of La Trobe Financial’s funding base, which includes institutional mandates and Australia’s largest Credit Fund at $6 billion, representing the most diversified funding base in the non-bank sector.
Approximately 65% of the transaction was placed with institutional, real-money investors across the structure, while 71% was placed with international investors.
The Arranger of the deal was Macquarie Bank. Joint Lead Managers included Commonwealth Bank of Australia, Citi, HSBC, Macquarie Bank, National Australia Bank, Natixis and Westpac Banking Corporation.
La Trobe Financial will pay 83 basis points over the Bank Bill Swap Rate (‘BBSW’) on $937 million of A1 notes, which have a weighted average life of 2.5 years.
Pricing on $177 million of A2 notes, which have a weighted average life of 2.5 years, was 105 basis points over BBSW.
About La Trobe Financial
Established in 1952 and with $12 billion of assets under management, La Trobe Financial is one of Australia’s leading diversified wealth managers, specialising in funding and investment solutions. La Trobe Financial has been a proven and trusted investment partner for institutional and retail investors, operating Australia’s largest retail Credit Fund with $5 billion in assets under management and 50,000 retail investors. It is 80% owned by Blackstone, one of the world’s leading investment firms with more than US$649 billion of assets under management worldwide, and 20% owned by management.
La Trobe Financial is regulated by the Australian Securities & Investments Commission (ASIC) and holds the requisite regulatory AFSL and ACL licences to operate and place RMBS issuances.
For further details please visit our website www.latrobefinancial.com.