Thinktank announces successful closure of $750 million residential mortgage-backed securities transaction

Leading independent property lender specialising in commercial and residential mortgages, Thinktank, has successfully closed its first residential mortgage-backed securities (RMBS) issue in 2024 totalling A$750 million.

This RMBS issuance marks Thinktank’s 15th transaction since commencement of the business in 2006, demonstrating the company’s scale and market prominence.

Due to strong investor demand, the launch size of A$500 million was upsized to A$750 million, with the final order book 1.5x over-subscribed and exceeding A$1.1 billion.

As an established issuer in capital markets, this transaction takes Thinktank’s total securitisation issuance to A$7.5 billion.

Thinktank CEO Jonathan Street said: “The transaction represents a strong start to the year for ourselves and the market generally, underscored by keen participation from both existing investors while also welcoming a number of new investors into our RMBS program.”

The final order book attracted interest from 22 institutional investors, with 60 per cent representing domestic accounts with 40 per cent from offshore participants.

Bank balance sheets accounted for 61 per cent of the final order book, with real money investors comprising the remainder.

Pricing details were disclosed across the capital structure, with the S&P and Fitch AAA rated Class A1-S Notes set at a margin of +0.90 per cent above the 30-day Bank Bill Swap Rate, the AAA rated Class A1-L Notes at 1.35% per cent and the AAA rated Class A2 Notes at +1.50 per cent. Notably, the Class A1-S, Class A1-L and Class A2 Notes priced in line with the initial price guidance at launch, reflecting a positive market reception, while the demand for the Notes further down the structure saw associated margins tighten at the left-hand side of the initial guidance ranges due to strong investor interest.

The pool of 1,200 first mortgage loans with an average size of $624,982 while 94.0 percent of properties were in major metropolitan areas with 6.0 percent in urbanised non-metro locations.

The successful bond issue highlights the sustained quality of Thinktank’s commercial and residential loan books over the long-term.

Mr. Street concluded, “We continue to maintain a positive outlook for the SME and the self-employed sector despite the persisting challenges of higher interest rates and we remain committed to continuing to expand our support for this critical part of the Australian economy.”