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The transaction was upsized from an initial target of $750 million following strong institutional demand and was priced at 1.08 per cent over one-month Bank Bill Swap Rate (BBSW).
According to Firstmac chief financial officer James Austin, the result was achieved despite increased caution among investors following the conflict and broader market uncertainty.
“To increase the transaction from $750 million to $2 billion in the current market is a very strong result and reflects the confidence investors have in the quality of Firstmac’s loans,” Austin said.
“The Iran War has clearly unsettled markets, with some investors sitting on their hands while they reassess relative value and the broader economic outlook. Against that backdrop, completing a $2 billion transaction at a good margin is a very positive result.”
Austin said the transaction’s four-year structure had been well received by investors, providing greater certainty around the expected repayment profile.
“The shorter four-year duration gave investors confidence around the timing of the transaction and also fitted neatly within Firstmac’s maturity profile,” he said.
“We saw strong support from domestic investors, along with renewed interest from offshore institutions, including investors from the UK, Italy, South East Asia and Japan.”
Austin also said offshore investors had closely scrutinised the federal government’s budget changes to negative gearing and capital gains tax.
“Foreign investors were very well briefed on the Australian market and asked detailed questions about how the Budget changes may affect property investors and lenders,” he said.
“The fact they invested anyway is a strong vote of confidence in Firstmac’s loan book, our credit quality and the resilience of the Australian residential mortgage-backed securities (RMBS) market.”
The transaction was arranged by National Australia Bank, with Australia New Zealand Banking Group (ANZ), Commonwealth Bank of Australia, DBS, Natixis, and United Overseas Bank acting as joint lead managers.
The latest issue brings the total value of RMBS and asset-backed securities issued by Firstmac since 2003 to more than $62 billion.
[Related: ScotPac completes $300m ABS transaction]
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