La Trobe Financial was able to complete the specialist transaction with repeat support from domestic and global investment houses and included a new significant global investor. Once again, support was seen across the structure with all notes over-subscribed and a strong pricing outcome, noting an extension to the call option to five years (from four years) to provide a longer funding term.
La Trobe Financial’s CFO Martin Barry stated, “We are pleased with the pricing this transaction achieved in a market that continues to carry significant uncertainty. This $500 million issuance has expanded our already-strong RMBS funding channel with a new large global investor onboarding and complementing 50 other active bidders of our paper; the issue was 1.3x overbid. The 2020-S1 bids also confirm the strength of our RMBS program, business platform and the quality of underlying assets in what remains an unclear global investment environment. La Trobe Financial has remained open for business throughout the COVID-19 virus crisis and maintains substantial forward funding capacity alongside $488 million of shock absorber and regulatory capital.”
For the second time since the start of the pandemic, La Trobe Financial was able to complete an issuance without direct support from the Australian Office of Financial Management (AOFM). The AOFM Structured Financial Support Fund (SFSF) was announced on 19 March 2020 as a $15 billion fund established to support non-banks fund raising. Non-banks have been critical drivers of innovation and provide much needed competition to continue supporting Australian consumers and small businesses.
Greg O’Neill, President and CEO at La Trobe Financial, commented, “This has been our 11th successful issuance to market since 2014. RMBS is one of our important funding channels to the business and the ongoing support of the AOFM through the SFSF of non-bank capital markets issuance should be commended, particularly during the most challenging period of April and May.”
Richard Parry, Deputy Treasurer at La Trobe Financial, added, “The ability to introduce a forbearance facility on such a timely basis, in consultation with industry and the Australian Securitisation Forum (ASF), is genuinely impressive and world leading. It was pleasing to complete our $500 million transaction without any need for primary or secondary market support from the AOFM.”
The underlying mortgage pool differed from the usual programmatic issuance from La Trobe Financial, with a more specialist breakdown of the same core mortgage assets. A higher composition of investment loans (90%), of which 35% was super-prime SMSF loans, providing a tactical benefit to the existing funding program and investors an opportunity to participate in a transaction with a slightly different proposition.
Paul Brown, Head of Group Portfolio Management at La Trobe Financial, commented, “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 wealth manager. With current trend loan originations now at $7+ billion per year, this was a practical step to complement current institutional mandates and our nationally and internationally awarded $5 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.”
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 50 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 competitive pricing, notwithstanding increased levels of market supply and note participation, from a select group of chosen investors comprising six domestic and four international investors from Europe and Asia,” he added.
With $12 billion of assets under management, La Trobe Financial has been responsible for over $28 billion worth of investment mandates of varying structures since being founded in 1952. The company has now issued $6.77 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, representing the most diversified funding base in the non-bank sector.
Approximately 84% of the transaction was placed with institutional, real-money investors across the structure, while 59% was placed with international investors.
The Arranger of the deal was National Australia Bank, while Joint Lead Managers included Macquarie Bank Limited, National Australia Bank and Westpac Banking Corporation. Wells Fargo was a Co-Manager.
La Trobe Financial will pay 100 basis points over the Bank Bill Swap Rate (BBSW) on $90 million of A1S notes, which have a weighted average life of 0.40 years.
Pricing on $260 million of A1L notes, which have a weighted average life of 3.10 years, was 175 basis points over BBSW.
Pricing on $77 million of A2 notes, which have a weighted average life of 4.80 years was 195 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.