Pepper Group Limited (“Pepper”) and Joint Lead Managers, Commonwealth Bank of Australia (Joint Lead Manager and Arranger), National Australia Bank (Joint Lead Manager and Redemption Facility Provider), and Westpac Banking Corporation confirmed that the Pepper Residential Securities Trust No 15 (“PRS15”) A$300m non-conforming RMBS issue priced on Thursday, 29 October 2015.
Transaction details are as follows:
|Class of notes||Provisional Ratings Moody's /S&P||Issue Amount (Mission)1||WAL (Years)||Issue Margin|
|A1-s1||P-1(sf) / A-1+(sf)||110.0||1.0||BBSW 1M + 0.65%|
|A1-a||Aaa(sf) / AAA(sf)||100.0||2.2||BBSW 1M + 1.30%|
|A-2||Aaa(sf) / AAA(sf)||36.5||2.2||BBSW 1M + 1.55%|
|B||Aa2(sf) / NR||29.5||4.0||BBSW 1M + 2.50%|
|C||A2(sf) / NR||5.1||4.0||Undisclosed|
|D||Baa2(sf) / NR||6.0||4.0||Undisclosed|
|E||Ba2(sf) / NR||3.9||3.7||Undisclosed|
|F||B2(sf) / NR||3.6||2.8||Undisclosed|
|G||NR / NR||5.4||5.0||Undisclosed|
1. WAL is based on a linear CPR ramp of 22%-28% over the first 12 months from the settlement date and then a flat CPR of 28% thereafter, Stepdown Criteria being met and Call Option being exercised at the first available opportunity.
All tranches were priced at par.
Settlement Date: Monday, 2 November 2015
Clean up call: Any Payment Date occurring:
- From November 2020 (ie 5 years); or
- When the aggregate Invested Amount of the Notes outstanding is less than 20% of the aggregate initial Invested Amount of the Notes
This transaction is Pepper’s second public non-conforming RMBS issue for 2015, having previously raised money in June 2015.
12 investors participated in the transaction which was a 100% domestic deal.
In addition to this raising, Standard & Poor’s (“S&P”) has reaffirmed Pepper’s non-conforming and prime servicer rankings as “Strong”. The rankings reflect S&P’s view that Pepper continues to be a high quality servicer of residential mortgage assets.
Commenting on the transaction, Patrick Tuttle, Co Group Chief Executive Officer, said “We are pleased with the pricing execution and strong level of domestic investor support for this 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. 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.
With respect to the reaffirmation of the servicer rating, Tuttle added “S&P’s reaffirmation of our Residential Loan Servicer ranking as Strong reinforces our position as a pre-eminent servicer in the Australian market, as reflected by the strong performance track record of the Pepper Residential Securities (“PRS”) program since its inception in 2003.”
Pepper Group Treasurer, Todd Lawler, added “Given the conditions in the market when we planned this transaction, we 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.”
Commonwealth Bank of Australia’s Associate Director of Debt Markets Securitisation, Andrew Cunningham, said “Strong support from the investment community in this deal reflects the strength of Pepper’s underwriting, servicing, management and infrastructure. Despite a challenging credit market backdrop, there was significant interest across the transaction, with several tranches oversubscribed, evidencing the resilience of Pepper’s funding model.”
Commenting on behalf of NAB, Sarah Samson, Director of Securitisation Originations said “It is really pleasing for NAB to be able to assist Pepper it its second primary “PRS” transaction for 2015. In aggregate Pepper has issued close to A$1bn of non-conforming RMBS in 2015 (including re-issues) in AUD and USD, and continues to prove itself as a regular and consistent issuer of very well performing RMBS backed by non-conforming and near prime Australian mortgages.
Haan Ti, Director Structured Finance at Westpac said “PRS15 was a strong print in very volatile market conditions. We were very pleased to see the investor participation for this transaction across the capital structure, highlighting that the market continues to be supportive to this quality issuer and the asset class.”
For further information please contact:
Co-Group Chief Executive Officer
Pepper Group Limited
Tel: 02 9463-4612
Pepper Group Limited
Tel: 02 8913-3009
Associate Director of Debt Markets Securitisation
Commonwealth Bank of Australia
Tel: 02 9118-1222
National Australia Bank
Tel: 03 8641-2997
Executive Director Head of Structured and Asset Finance
Westpac Institutional Bank
Tel: 02 8254 9116