Liberty prices $1.5 billion non-prime RMBS issue

Liberty Financial (Liberty) today priced its A$1.5 billion Liberty Series 2018-1 RMBS issue, its forty-third public term securitisation in Australia. Notably the deal also includes €83.4 million Euro tranche to accommodate the strong demand for Australian collateral from European investors.

The Liberty Series 2018-1 transaction is the largest deal consisting of a mixed pool of prime and non-prime mortgages by any Australasian RMBS issuer ever.

Given this strong investor demand across all offered tranches, the transaction was upsized from a launch volume of A$700 million to A$1.5 billion. Commonwealth Bank of Australia (CBA) is the sole Arranger and Joint Lead Manager along with Bank of America Merrill Lynch (Euro Notes only), Deutsche Bank, National Australia Bank and Westpac Banking Corporation.

The Liberty Series 2018-1 transaction comprises A$1.5 billion of notes rated by Moody’s Investors Service and Fitch Ratings (AAA notes only).

• The A$150.0 million Class A1a notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 0.2 years, priced at a margin of 65 basis points over one month BBSW.

• The A$691.5 million Class A1b notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 2.1 years, priced at a margin of 125 basis points over one month BBSW.

• The €83.4 million Class A1c notes to be rated Aaa(sf)/AAAsf, with a weighted average life of about 2.1 years, priced at a margin of 50 basis points over three month EURIBOR.

• The A$372.0 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 165 basis points over one month BBSW.

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

Ernest Biasi, Executive Director, Securitisation at CBA, said: “Liberty has once again confirmed its status as a major issuer of 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.”

Peter Riedel, Chief Financial Officer at Liberty, said: “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.”

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.