Non-bank lender upsizes Liberty Series 2026-1 transaction on strong demand
Liberty Financial has completed pricing of its Liberty Series 2026-1 residential mortgage-backed securities (RMBS) transaction, a $2 billion deal that marks the lender’s largest capital markets issue to date.
The transaction is Liberty’s 56th publicly placed RMBS and its 102nd term capital markets deal overall. The issue is backed by a portfolio of Australian residential mortgages and will settle on March 10.
The deal was originally launched at $1 billion but was doubled in size following strong demand across the capital structure. BofA Securities acted as sole arranger and joint lead manager, working alongside Commonwealth Bank of Australia, Deutsche Bank, National Australia Bank, SMBC Nikko Capital Markets and Westpac Banking Corporation.
The Liberty Series 2026-1 Trust comprises $2 billion of notes rated by Moody’s Investors Service, with the AAA tranches also rated by Fitch Ratings. The $600 million Class A1a notes, expected to be rated Aaa(sf)/AAAsf, have a weighted average life of about 0.4 years and priced at 70 basis points over one‑month BBSW. The $1.1 billion Class A1b notes, also expected to be rated Aaa(sf)/AAAsf, have a weighted average life of about 2.6 years and priced at 100 basis points over one‑month BBSW.
The $216 million Class A2 notes, likewise expected to be rated Aaa(sf)/AAAsf, carry a weighted average life of about 3.2 years and were priced at a margin of 115 basis points over one‑month BBSW. Pricing for the subordinated Class B, C, D, E and F notes – expected to be rated Aa2(sf), A2(sf), Baa2(sf), Ba2(sf) and B2(sf) – has not been disclosed.
Underlying the issue is a pool of home loans with a weighted average loan-to-value ratio of 61% and seasoning of 25 months.
“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,” said Peter Riedel (pictured top), chief financial officer at Liberty Financial.
“We are humbled to announce our largest capital markets issue and grateful for the support investors have extended to our business from our very first public term issuance in 1999.”
Since its inception in 1997, Liberty has broadened its product set across Australia and New Zealand to include residential and commercial mortgages, motor vehicle finance, personal and business loans, broking services, general insurance and investment products. The group has raised more than $54 billion in domestic and offshore capital markets and has provided finance to nearly one million customers.
The ASX-listed non-bank reported a modest contraction of about 4% in its residential loan book in its latest financial results, but said overall balances were steady at around $14.8 billion, supported by a record year in SME finance and self-managed super fund (SMSF) lending. The group’s secured portfolio – which aggregates SME, SMSF and auto finance exposures – increased by 4.7% to $6.1 billion, with originations rising by more than 15%. Liberty remained profitable, posting a net interest margin of 2.47%.
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