Liberty prices $1.2 billion RMBS issue

Liberty Financial today priced its A$1.2 billion Liberty Series 2017-3 RMBS issue, its thirty-ninth public term securitisation in Australia. This is the largest deal post GFC consisting of a mixed pool of prime and non-prime mortgages by an issuer. Notably the deal also includes €165 million Euro tranche to accommodate the strong demand for Australian collateral from European investors.

Given this strong investor demand across all offered tranches, the transaction was upsized from a launch volume of A$700 million to A$1.2 billion. Deutsche Bank (Deutsche) is the sole Arranger and Joint Lead Manager along with Commonwealth Bank of Australia and National Australia Bank.

The Liberty Series 2017-3 transaction comprises A$1.2 billion of notes rated by Moody’s Investors Service and Fitch Ratings (AAA notes only).

• The A$120.0 million Class A1a notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 0.1 years, priced at a margin of 75 basis points over one month BBSW.

• The A$416.0 million Class A1b notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 2.0 years, priced at a margin of 135 basis points over one month BBSW.

• The €165.0 million Class A1c notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 2.0 years, priced at a margin of 50 basis points over three month EURIBOR.

• The A$280.8 million Class A2 notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 3.5 years, priced at a margin of 210 basis points over one month BBSW.

The pricing of the Class B, C, D, E and F notes to be rated Aa2(sf), A2(sf), Baa2(sf), Ba2(sf) and B2(sf), respectively, is not disclosed.

Tim Richardson, Director and Head of Pacific ABS at Deutsche, said: “Liberty Financial has again confirmed its status as a major issuer of non-prime mortgage backed securities in the Australian market. We are extremely pleased with the level of investor participation across the capital structure and their interest in opportunities to buy collateral originated by Liberty Financial. In particular, Liberty’s latest transaction represents the largest non-prime issue since the beginning of the GFC”.

“Liberty is a leader in providing households and small businesses with the freedom to choose from a wide range of products and services to meet their financial needs. We are grateful for the support investors have extended to our business,” said Peter Riedel, Chief Financial Officer at Liberty.

Liberty has a rating of “STRONG” from Standard & Poor’s for the servicing of prime and non-prime mortgages as well as for servicing auto loans and commercial mortgages. Liberty is also Australia’s only investment grade rated non-bank issuer (BBB-, outlook stable by S&P) and one of only a few lenders with an unblemished capital markets record with no ratings downgrades or charge-offs ever experienced by its securitisation program.