Liberty Prices $600 Million SME Issue

03 Sep 2020 | Share:

Liberty Financial (Liberty) today priced the Liberty Series 2020-1 SME transaction, its sixty-second public term securitisation. The Liberty Series 2020-1 SME Trust is Liberty’s ninth and largest securitisation issue of securities backed by a portfolio of its innovative small-to-medium enterprises (SME) loans bringing Liberty’s total SME securitisations to well over A$3 billion.

Given this strong investor demand across all offered tranches, the transaction was upsized from a launch volume of A$400 million to A$600 million. Westpac Banking Corporation (WBC) is the sole Arranger. WBC is also a Joint Lead Manager along with Credit Suisse. The transaction comprises A$600 million of notes rated by Moody’s Investors Service (Moody’s). The transaction attracted strong interest from investors across all offered tranches.

The Class A1 tranche is a super-senior tranche which benefits from over two times the subordination required to achieve a Aaa-rating from Moody’s.

  • The A$390.0 million Class A1 notes to be rated Aaa(sf) with a weighted average life of about 2.7 years, priced at a margin of 160 basis points over one-month BBSW.

  • The A$108.0 million Class A2 notes to be rated Aaa(sf) with a weighted average life of about 3.8 years, priced at a margin of 200 basis points over one-month BBSW.

The pricing of the Class B, C, D, E and F notes to be rated Aa1(sf), Aa2(sf), A2(sf), Baa3(sf) and B3(sf) is not disclosed.

"We are extremely pleased with the level of institutional investor participation across the capital structure which is a strong endorsement of Liberty, and the collateral offered. Investors continue to have strong interest in assets classes outside of traditional residential mortgages as evidenced by the success of this transaction" said Brad Schwarz, Director at Westpac.

Will Farrant, Managing Director at Credit Suisse, said: “The success of this transaction confirms Liberty is a leading and trusted benchmark issuer of SME securities in the Australian market. Investors continue to show healthy interest in opportunities to buy high quality collateral originated by exceptional issuers.”

The issue consists of a pool of SME mortgages with a weighted average loan-to-value ratio of 61% and is seasoned at 20 months. The Liberty Series 2020-1 SME transaction will settle on 10 September 2020.

“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.