Liberty prices $700 million SME issue

26 Oct 2021 |

Liberty Financial Pty Ltd (Liberty) today priced the Liberty Series 2021-1 SME transaction, its sixty-eighth term securitisation. The Liberty Series 2021-1 SME Trust is Liberty’s tenth and largest issue of securities backed by a portfolio of its innovative small-to-medium enterprises (SME) loans bringing Liberty’s total SME securitisations to over A$4 billion.

Given this strong investor demand across all offered tranches, the transaction was upsized from a launch volume of A$600 million to A$700 million. Westpac Banking Corporation (WBC) is the sole Arranger. WBC is also a Joint Lead Manager along with Credit Suisse. The transaction comprises A$700 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$455 million Class A1 notes to be rated Aaa(sf) with a weighted average life of about 2.7 years, priced at a margin of 100 basis points over one-month BBSW.

  • The A$140 million Class A2 notes to be rated Aaa(sf) with a weighted average life of about 3.8 years, priced at a margin of 125 basis points over one-month BBSW.

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

Will Farrant, Managing Director at Credit Suisse, said: "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 asset classes outside of traditional residential mortgages as evidenced by the success of this transaction.”

The issue consists of a pool of SME mortgages with a weighted average loan-to-value ratio of 62% and is seasoned at 15 months. The Liberty Series 2021-1 SME transaction will settle on 4 November 2021.

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 positive 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.

© Liberty Financial Group Limited (ACN 125 611 574) and Liberty Fiduciary Ltd (ACN 119 884 623).