New Heritage $800 million securitisation issue

Heritage Building Society today announced the successful finalisation of an A$800 million public securitisation term issue, its tenth and largest domestic securitisation transaction.

The residential mortgage-backed securities (RMBS) issue, completed via HBS Trust 2011-1, was arranged by National Australia Bank who also marketed the transaction in conjunction with joint Lead Managers ANZ Banking Group and Westpac Banking Corporation. 

The deal was upsized from the initial launch amount of $500 million following strong support from investors which resulted in the Class A notes being two times oversubscribed. It is the first public RMBS transaction completed by Heritage for five years.

The structure of HBS Trust 2011-1 included three classes of Notes as follows:

Class Rating Volume Margin over BBSW
A AAA/Aaa $749.6m 110 basis points
AB AAA/Aaa $21.6m 195 basis points
B AA-/NR $28.8m Not disclosed

Heritage CEO John Minz said the transaction represented a return to one of the Society’s established sources of wholesale funding, but the final result was a great achievement given the uncertain market conditions.

“Heritage has come through the GFC very strongly. In the past few years we have been very successful in increasing the diversity of our funding sources but haven’t been active in the public securitisation space. Investors have not had access to a primary RMBS issue from Heritage since 2006 therefore the time was now right for us to return to the domestic market,” he said. .

“We road showed the deal and received a very positive reaction from investors, with good feedback about the Society and how we are positioned in the market. At $800m, this is the largest domestic transaction for Heritage surpassing the $750m deal completed in June 2006, which demonstrates the depth of support for our low risk style of securitisation issuance.”

Mr Minz said Heritage would continue to pursue diversification in its funding mix

“With $8 billion in assets under management, Heritage is Australia’s largest building society and continues to be recognised as a leader amongst its peers,” he said.

 “By regularly accessing a broad base of funding options, we can maintain our growth strategy and continue to deliver lower fees and a better financial outcome to our member base, right across the eastern seaboard of Australia.”

* Based on a $150,000 loan over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.