Thinktank, a specialised lender in commercial and residential properties, has concluded its fifth residential mortgage-backed securitisation (RMBS) issuance for $750 million, an increase from the initial target of $500 million due to the positive response from investors.
The latest transaction marks Thinktank’s 14th securitisation, bringing its total bonds issued to $6.75 billion, including $2 billion issued this year.
Thinktank said this development confirms the non-bank’s position as a prominent capital markets issuer and lender secured by mortgages for Australian self-employed and SME borrowers.
“The participation of 21 institutional investors (including two new investors), split between domestic (81%) and offshore accounts (19%) for this $750 million deal, illustrates continuing strong support for the company’s dual mortgage-backed wholesale funding programs through the cycle,” Thinktank CEO Jonathan Street (pictured above) said.
Final ratings for the transaction were assigned by Standard and Poor's (S&P) and Fitch.
Pricing details for the various notes in the structure were disclosed, with the Class A1 Notes set at a margin of +1.45% above the 30-day bank bill swap rate and the Class A2 Notes at +1.70% over the 30-day bank bill swap rate. The Class A1 Notes tightened by 0.05%, and the Class A2 Notes tightened by 0.10% inside the initial price guidance, driven by robust investor interest.
Real money investors comprised 28% of the total issuance, with bank balance sheets covering the remaining portion. The transaction garnered significant demand, with bids totalling just over $1.1 billion, resulting in it being oversubscribed by 1.5 times. The pool of first mortgage loans consisted of 1,116 loans, with an average size of $672,006. Approximately 86.2% of the properties were located in major metropolitan areas, while 13.8% were in highly urbanised non-metro locations.
“While the continuing impacts of higher interest rates are being progressively felt throughout the economy and the demand for credit has softened noticeably, our outlook for credit performance remains cautiously positive at this time and we are keen to maintain our long-term support of SME and self-employed borrowers seeking mortgage finance solutions,” Street said.
New South Wales led in borrowing, accounting for 41.9% of the loans, followed by Victoria at 38.8%, and Queensland at 11.4%. SMSF borrowers made up 8% of the loans while the weighted average LVR was 69.7%. Approximately 44.3% of the loans were extended to investors, with the remainder going to owner-occupiers. The majority of loans, totalling 81.8%, were set up with principal and interest repayments, while 18.2% commenced with an interest-only period before converting to principal and interest.
Thinktank is a specialist property finance lender with more than 200 employees, offering commercial, residential, and SMSF property finance. The company began operating in 2006 and currently has offices in Sydney, Melbourne, Brisbane, and Perth. To date, Thinktank has provided more than $9.6 billion in mortgage finance to Australian SMEs, self-employed individuals, and borrowers.
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