Australia’s largest non-bank lender, Pepper Money, has pioneered a new securitisation structure as an alternative to the traditional outright sale of mortgage portfolios, offering investors a pre-packaged structure.
“We are a frequent seller of mortgage loan portfolios,” said Anthony Moir, Pepper Money’s treasurer. “Historically, our mortgage portfolio sales have been completed through an outright sale to a purchaser, who is then responsible for the subsequent structuring and financing of the portfolio.”
As of the end of July, Pepper Money had completed 39 whole-loan sales totalling A$11.6bn since 2015, according to its half-year results.
Pepper Mortgage Wholeloan Securities No.1 represents the sale of an A$1.7bn pool of residential mortgages, with the senior 90% of the structure funded by a loan advance from Bank of America.
By putting the financing and structure in place upfront, Pepper Money has removed the need for potential purchasers to arrange their own debt financing or front the purchase with equity.
“We’ve put together a structure that appeals to a wider investor base than our traditional outright portfolio sales,” Moir said.
Pepper Money may use either securitisation structures or traditional whole-loan sales in future, depending on relative execution, Moir said.
The transaction also includes...
