Martin Barry

Blackstone majority owned Australian portfolio company and $12.5 billion AUM asset manager La Trobe Financial announced that on the 30 July it successfully priced its second Residential Mortgage Backed Securities (“RMBS”) transaction for 2021 – a $1.25 billion RMBS issuance, supplementing its unique and diverse funding program.

La Trobe Financial was able to complete the transaction with repeat support from domestic and global investment houses. Once again, support was seen across all tranches, with all notes over-subscribed and pricing outcomes lower than its May 2021 issuance. With this most recent 2021-2 transaction, La Trobe Financial locked in the lowest cost of funding since the global financial crisis (GFC) for the sector, setting a new benchmark for its peers.

La Trobe Financial’s CFO Martin Barry stated, “Following the public announcement of this transaction, we were overwhelmed with interest from investors which saw some bonds initially more than 2.5x oversubscribed. This early engagement allowed us to decisively upsize the transaction from $750 million to $1.25 billion and bring forward the transaction by a week, despite domestic and global uncertainty and uneven recovery from the pandemic. This $1.25 billion issuance continues to expand our already-strong RMBS funding channel comprising of some 53 active holders of our paper. The 2021-2 transaction confirms the strength of our RMBS program, business platform and the quality of underlying assets. La Trobe Financial has co-invested alongside investors and currently holds $457 million of shock absorber and regulatory capital.”

Chris Andrews, Deputy CEO and Chief Investment Officer at La Trobe Financial, commented, “Our RMBS program continues to play an important role in our strategic funding program. This issuance sits alongside over $30 billion of fully repaid term debt and warehouse funding lines that we have managed since the business started in 1952. Our RMBS investors are substantial partners of our business and this new funding will assist us to continue to support under-served borrowers as the Australian economy rebounds from COVID-19.”

La Trobe Financial has experienced tremendous growth in 2021, currently originating over $12 billion p.a. The underlying mortgage pool is consistent with originations and prior high-quality issuances from La Trobe Financial, consisting 65% self-employed borrowers, a traditionally under-served, yet high quality component of the mortgage market. Weighted Average Loan to Value ratio is 70% with no loans approved at greater than 80% Loan to Value. Super-prime Self Managed Super Fund investment loans comprise 14% of the pool and 94% of the pool has no prior credit events.

Mr Andrews, Deputy CEO and CIO, added, “The pricing and order book reflects a strong endorsement of La Trobe Financial’s high quality assets, expertise and long, consistent, track record as Australia’s oldest diversified asset manager. With originations now at $12+ billion per year, this issuance complements our institutional mandates and our nationally and internationally awarded $6.3 billion Credit Fund. We have built a disciplined investment and funding strategy and continue to deliver an outstanding value proposition for our investors that will see the business continue to grow.”

CFO Mr Barry further commented, “The proceeds of the issue will be used by La Trobe Financial to continue writing home and business loans for everyday Australians at a critical time in the history of our economy. We welcomed a significant large global investor to our existing 53 investor-strong RMBS program and are delighted by the interest we have received from both offshore and domestically as we build out our diverse global investor base.”

“With this RMBS transaction we achieved our goal of industry-leading pricing, notwithstanding increased levels of market supply and note participation from a select group of chosen investors comprising seven domestic, four from Asia, two from the United States and two from Europe or the U.K.” he added.

With $12.5 billion of assets under management, La Trobe Financial has been responsible for over $67 billion worth of asset originations since being founded in 1952. The company has now issued $9.17 billion of RMBS to a range of Australian and international investors. Its RMBS program has seen continued support from repeat investors and a progressively widening investor base with each transaction. Both reflect well on the diversity and resilience of La Trobe Financial’s funding base, which includes institutional mandates and Australia’s largest Credit Fund at $6.3 billion, representing the most diversified funding base in the non-bank sector.

Approximately 71% of the transaction was placed with institutional, real-money investors across the structure, while 78% was placed with international investors.

The Arranger of the deal was National Australia Bank. Joint Lead Managers included Citi Bank, Commonwealth Bank of Australia, HSBC, Macquarie Bank, National Australia Bank, Natixis, United Overseas Bank and Westpac Banking Corporation.

La Trobe Financial will pay 80 basis points over the Bank Bill Swap Rate (“BBSW”) on $975 million of A1 notes, which have a weighted average life of 2.6 years.

Pricing on $139 million of A2 notes, which have a weighted average life of 2.6 years, was 105 basis points over BBSW.

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Martin Barry

La Trobe Financial has announced that it has successfully completed its second RMBS transaction for 2020 (and its 11th issuance since 2014) – a $500 million RMBS tactical issuance, supplementing its diverse funding program.

La Trobe Financial was able to complete the specialist transaction with repeat support from domestic and global investment houses and included a new significant global investor. Once again, support was seen across the structure with all notes over-subscribed and a strong pricing outcome, noting an extension to the call option to five years (from four years) to provide a longer funding term.

La Trobe Financial’s CFO Martin Barry stated, “We are pleased with the pricing this transaction achieved in a market that continues to carry significant uncertainty. This $500 million issuance has expanded our already-strong RMBS funding channel with a new large global investor onboarding and complementing 50 other active bidders of our paper; the issue was 1.3x overbid. The 2020-S1 bids also confirm the strength of our RMBS program, business platform and the quality of underlying assets in what remains an unclear global investment environment. La Trobe Financial has remained open for business throughout the COVID-19 virus crisis and maintains substantial forward funding capacity alongside $488 million of shock absorber and regulatory capital.”

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Greg O’Neill

Blackstone portfolio company, La Trobe Financial, has stunned capital market observers with a benchmark $1.25 billion RMBS raising – the largest securitisation globally since the coronavirus took hold in March – effectively re-opening Australian debt capital markets and confirming Australian residential mortgages as a global safe harbour investment.

La Trobe Financial, with $11 billion in assets under management, saw support from global investment houses in Asia, the US and Europe and from Australian institutional investors. The strength of support was seen in the strong level of over-subscription across all notes, as well as excellent pricing outcomes in a volatile market. Notably, while the Federal Government’s Australian Office of Financial Management (AOFM) was closely involved with the deal, investor demand was such that no AOFM investment was required.

Martin Barry, La Trobe Financial’s Chief Treasurer & Strategy Officer commented, “We are pleased to have been able to return markets to some level of normality post the onset of the coronavirus with the raising of $1.25 billion from global and domestic investors – which is the largest securitisation transaction since the coronavirus took hold. This transaction confirms the strength of our platform and the quality of our underlying assets as ‘safe harbour’ assets in a difficult global investment environment. We are also delighted to have the support of the AOFM through this transaction. Whilst they were ultimately not required to purchase our bonds, their presence and decisiveness was a critical underpinning to investor confidence in the transaction.”

La Trobe Financial’s President and Chief Executive Officer, Greg O’Neill OAM, commented, “Congratulations to our treasury deal team in securing a benchmark $1.25 billion transaction not just for La Trobe Financial, but for capital markets in Australia. The team has shown that, even in difficult markets, we are recognised as bringing to the table a quality platform and an outstanding ability to execute. We are pleased to recognise the ongoing support for the industry from the AOFM and its role in continuing to buttress Australia’s reputation as a destination for global investors.”

The AOFM’s Structured Financial Support Fund (SFSF) was announced on 19 March 2020 as a $15 billion fund established to enable smaller lenders, who often drive innovation and provide competition, to continue supporting Australian consumers and small business. As well as its involvement in the current La Trobe Financial transaction, the AOFM has utilised the SFSF to support two prior transactions. It is also working to implement a forbearance facility, to support RMBS and warehouse cash flows through the coronavirus hardship phase.

The proceeds of the issue will be used by La Trobe Financial to continue writing home and business loans for ordinary Australians at a critical time in the history of our economy. Barry commented, “We welcomed three new investors to our already 46 investor-strong RMBS program and are delighted by the interest we have received both offshore and domestically as we build on our diverse investor base. We remain good stewards of other people’s capital and this enables us to obtain and maintain the trust of our clients – this is the real asset of the company.”

“With this RMBS transaction we achieved competitive pricing, notwithstanding increased levels of market supply and note participation from 15 domestic and seven international investors from Europe, USA and Asia.”

With $11 billion of assets under management, La Trobe Financial has been responsible for over $25 billion worth of investment mandates of varying structures since being founded in 1952. La Trobe Financial has now issued $6.17 billion of RMBS to a range of Australian and international investors. Its RMBS program has seen continued support from repeat investors and a progressively widening investor base with each transaction. Both reflect well on the diversity and resilience of La Trobe Financial’s funding base, which includes institutional mandates and Australia’s largest Credit Fund, representing the most diversified funding base in the non-bank sector.

Richard Parry, Head of Group Portfolio Management at La Trobe Financial commented, “The pricing and level of over-subscription reflects a strong endorsement of La Trobe Financial’s high quality assets, expertise and long, consistent track record as Australia’s oldest diversified wealth manager. With current trend loan originations now at $10+ billion per year, this was a practical step to complement current institutional mandates and our nationally and internationally awarded $5 billion retail Credit Fund. We have built a disciplined investment strategy and continue to deliver outstanding returns for all of our investors.”

Approximately 88% of the transaction was placed with institutional, real-money investors across the structure. Investors to the structure participated from Europe, USA and Asia, together with domestic Australian domiciled institutions.

The Arranger of the deal was Macquarie Bank, while Joint Lead Managers included the Commonwealth Bank of Australia, National Australia Bank, The Hongkong and Shanghai Banking Corporation, Macquarie Bank, Natixis and Citi. Wells Fargo was a Co-Manager.

La Trobe Financial will pay 120 basis points over the Bank Bill Swap Rate (BBSW) on $281 million of A1S notes, which have a weighted average life of 0.70 years.

Pricing on $593 million of A1L notes, which have a weighted average life of 3.20 years, was 195 basis points over BBSW.

Pricing on $235 million of A2 notes, which have a weighted average life of 3.20 years was 275 basis points over BBSW.

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Chris Andrews

La Trobe Financial is pleased to announce that the Peer-to-Peer (P2P) investment option in the La Trobe Australian Credit Fund has been recognised with a “Superior 4 Star” rating by SQM Research.

In the report, SQM Research Head, Louis Christopher states “the Fund has outperformed the peer group and SQM Research’s comparative benchmark on both a one, three-year and since inception……the Fund’s three-year rolling return was 8.4%, compared to the benchmark’s and peer groups 5.6% and 7.6% respectively”.

Further Christopher says “SQM Research believes that the highly resourced and skilled team in place at La Trobe Financial Group, the Fund’s track record, in particular during the GFC, as well as La Trobe Financial Group’s financial and historical strength in the Lite-documentation space should allow the Fund to continue to provide investors with strong risk-adjusted returns.”

Mr Chris Andrews, Chief Investment Officer at the La Trobe Financial, mentioned “With over 60 years’ experience in the asset class and over twenty years’ in the P2P space, this is the largest and most robust P2P investment portfolio in Australia. For investors looking for capital stable investments, this is a genuine P2P investment option that allows greater control, choice and diversification in their portfolio”.

The P2P’s manager, La Trobe Financial, was established in 1952 as a credit specialist. It has attracted significant attention for its innovative ‘peer to peer’ investment offering, which allows the ‘matching’ of investors with individual borrowers in its first mortgage-secured loans from as little as $1,000.

Andrews added that “the La Trobe Financial team is driven by the need for consistency and repeatability of performance. With equities markets experiencing such volatility, our investors are targeting capital stability. We have provided that since inception.”

Martin Barry, Chief Wealth Management Officer at La Trobe Financial, commented, “Like any fund, the performance of the P2P is driven by the quality of its assets. All are subject to a rigorous credit assessment and none has a loan to value ratio higher than 75%. We therefore welcome SQM Research’s rating and external validation of our approach.”
La Trobe Financial is also rated for it’s Pooled Mortgages Option (PMO) by SQM Research (Superior 4 ¼ stars), Lonsec (Recommended) and Zenith (Recommended). It has been judged as Australia’s Best Mortgage Fund for seven (7) consecutive years by reputable finance journal, Money magazine. The organisation has also achieved international recognition by the International Alternative Investment Review Awards (IAIR Awards) for four (4) consecutive years and this year was recognised as Asset Manager of the Year – Asia Pacific.

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Martin Barry

Credit specialist, La Trobe Financial, is pleased to announce a new and innovative Aged Care Loan product further cementing its broad specialist product suite credentials.

As the ageing population rapidly grows in Australia, approximately $3 billion per annum is already required to fund individuals moving into aged care facilities. Such deposit, known as the Refundable Accommodation Deposit (RAD), can commonly exceed $500,000 and the question confronted by many families is: How are we going to fund the deposit?

La Trobe Financial is taking a lead on this issue and has developed a solution that addresses this problem. A product that specifically funds the payment of the RAD and also helps reduce the emotional stress for families when moving a loved one to an aged care facility.

What makes the La Trobe Financial Aged Care Loan innovative is that it is the most flexible aged care loan product in the market. We will lend up to 50% LVR against the borrower’s primary residence, lend over and above the RAD for property improvements, and we allow interest accrual for part of the loan life.

In a nutshell the La Trobe Financial Aged Care Loan gives families – “breathing space”.

Martin Lynch, Head of Aged Care Products, who has recently joined La Trobe Financial stated “this Aged Care Loan is a compelling financial product and one which helps to meet the needs of a rapidly growing ageing population. Unfortunately in the years ahead there will be far more elderly Australians, whose retirement savings will simply not be able to meet such large deposits. This product will help families fund a deposit efficiently and reduce stress when having to transfer a family member into an aged care facility.”

Martin Barry, Vice President and Chief Wealth Management Officer, commented “As innovative leaders in the financial markets, we are very pleased to welcome Martin Lynch to La Trobe Financial and launch this important new product. Martin brings a wealth of experience in equity release mortgage products and we are delighted to have him on board. He is a former chairman of SEQUAL the reverse mortgage industry peak body and was twice listed by the Mortgage Professional Association – MPA magazine as one of the “Hot 100” in the Australian mortgage industry.”

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Martin graduated from Imperial College London and commenced his career with PricewaterhouseCoopers as an Actuary before joining the Royal Bank of Scotland (RBS) in 2001 within the London based Global Securitisation team. As RBS expanded, Martin had postings to Tokyo and Sydney and delivered numerous successful securitisation transactions in the region.

More recently Martin consulted to Bank of Tokyo-Mitsubishi UFJ in Sydney before accepting the new Vice President position at La Trobe
Financial. Commenting on the appointment, Martin said: “La Trobe Financial has achieved significant growth over the years covering $10 billion of funds under management. The company now boasts the largest retail mortgage funds operation in Australia, a growing China operation showing significant opportunities for expansion and a broad recognition as an innovator in specialist mortgage products with, for example, our new parent to child (P2CTM) offering”.

Adding further Martin commented: “La Trobe Financial is a wonderful business with strong financials, market presence and leadership. One of the reasons I admire La Trobe Financial is because it is strongly focused on clients, staff and developing executive talent to help lead the company forward.”

CEO, Greg O’Neill stated…”Martin brings a plethora of experience to the company and will make a significant contribution. He will play a major role in helping grow our Sydney office as well as our international operations. We welcome Martin and look forward to working with him on developing our business further.”

Randal Williams, Chief Investment Officer at La Trobe Financial stated “Martin is an excellent asset to our company and brings many
complementary skills to the team. His international experience will help us reach new heights over the coming years. We welcome Martin to the team.

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