From Banking Day:
The co-chief executive of lender and loan servicer Pepper Group, Patrick Tuttle, is not concerned about the lack of activity in the mortgage securitisation market this year, predicting that the first mortgage-backed issue by an Australian issuer is not far away.
Pepper is particularly sensitive to developments in the securitisation market, with 43 per cent of its current funding coming from public and private securitisation trusts. Another 43 per cent of its funding comes from warehouse facilities that will have to be termed out at some stage.
Pepper is on a strong growth path, with a 97 per cent increase in loan originations over the 12 months to December, compared with the previous year, and 34 per cent growth in its loan book.
A prolonged hiatus in the securitisation market could put a brake on the company’s growth.
Tuttle said: “I am not worried about that. The first issue is close. A major bank is preparing to go into the market.
“We are looking at late March or April for our first issue and I am confident about that. Margins will be wider than last year but we have factored that in.”
Margins are non-existent with major bank CDS prices in mid-130s today. We’ll need to see spreads narrow first.
