Lender totals $1.1bn RMBS transactions

by Rebecca Pike31 Aug 2018

Bluestone has priced its 19th residential mortgage backed security (RMBS) issuance under its Sapphire program.

The transaction is the second of the year for Bluestone, having issued the first non-bank deal of 2018 in February. The latest deal brings Bluestone’s total issuance to $1.1bn over the last 15 months.

In a softer market Bluestone received interest from existing and new investors.

Investors paid particular attention to the recent acquisition of Bluestone’s Asia Pacific business by certain affiliates of Cerberus Capital Management, L.P, a global leader in alternative investing.

Bluestone’s CEO, Campbell Smyth, said, “Since returning to origination in 2013 we have been focused on working with brokers and investors to rebuild the Bluestone brand.

“The Cerberus acquisition has completed the picture for the business and a lot of bond investors, adding the financial backing we needed to compliment the fantastic business we have rebuilt.”

Bluestone has recently expanded its product set to include more near prime borrowers alongside non-conforming borrowers who the business has traditionally worked with.

Smyth added, “We see a real opportunity in the near prime space. It’s an area that has existed for some time but has only recently evolved as a result of the pull back by the major lenders.

“This is creating opportunities to capture the group of borrowers who would have previously been written by the banks.

“As a result, we expect to see the average borrower characteristics to improve in the Sapphire pools.

“Our last transaction, Sapphire 2018-1, consisted of around 10% near prime borrowers whereas this transaction is around 25%. Going forward we expect this number to increase above 50% of our originations.”

In the future, Bluestone said it expects to expand into additional lending markets, further entrenching themselves as one of Australia and New Zealand's leading non-bank lenders.

Smyth said, “We have big plans for the business and it is fantastic that we have come so far after only 5 months of new ownership.  We will continue with our focus of building a great team, which is the backbone of both what we have done and will do in the future.”

Bluestone is likely to return to the market in Q1 2019 with Sapphire 2019-1.