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Self-employed specialist broker RedZed has notched up its third successful RMBS pricing for 2022, the company has confirmed.
RedZed Lending Solutions Pty Limited (RedZed) has successfully priced a $500 million RMBS transaction: RedZed Trust Series 2022-3, its third for 2022.
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Overall, this issuance is the self-employed lender’s 15th debt capital markets issuance and takes total issuance to $5.7 billion, RedZed highlighted.
This latest pricing features RedZed’s EU and UK Risk Retention compliant structure, which was supported by real-money domestic and offshore investors across all tranches, the company added.
Fitch and Moody’s have assigned preliminary ratings and the tranches involved are in the following classes: A1 and A2, B, C, D, E, F, plus G1 and G2.
Of the result, RedZed chief financial officer Chris Wilson said: “Despite a challenging and volatile credit markets environment, we are pleased to have firm support from real money investors across all tranches of the transaction, which signifies a strong commitment to our securitisation program and confidence in RedZed’s experience in lending to the self-employed borrower segment.”
In terms of acting as joint lead managers, Commonwealth Bank Australia (CBA), National Australia Bank (NAB) and Westpac Banking Corp (Westpac) were all involved with the transaction, which is due to settle on 21 November 2022, RedZed has stated.
Don’t believe the hype and gloom
The successful result is another positive sign for the company and the sector, which ties in with sentiments of RedZed head of distribution and product, Adrian Fischer, to The Adviser’s In Focus podcast recently.
Asked about current conditions in the market, especially post-pandemic, Mr Fischer outlined: “We’ve got a lot of property experts or predictors out there who are predicting doom and gloom.
“It’s fair to say that at the moment, every time you turn on the TV, every time you read a newspaper, there is a lot of doom and gloom about the property market, but I think that’s quite unfounded.
“The property market has always been very robust in Australia and, yes, we’re seeing obviously seeing a bit of a correction at the moment.
“Some forecasters have been predicting sort of a reduction of 20-, 25-, 30 per cent in the reduction of values of properties various, but would be very surprised if we get to those sort of levels.
“I certainly don’t subscribe to the theory that they’re going to fall off the cliff that a lot of experts have been suggesting.
“But again, I think why we’re seeing it drop a bit at the moment is just a lot of people subscribing to that scare mongering and that uncertainty with rates increasing at the moment and pressures on affordability and so I think people are just sort of sitting back a little bit at the moment, rather than sort of going headstrong into what is typically a very strong spring market that Australia generally has.”
Self-employed are tough battlers
In explaining trends seen post-lockdowns from RedZed’s perspective, Mr Fischer explained: “First time buyer section really isn’t for us. We’re a lender to the self-employed, and that is our focus and 98 per cent of our customers are self-employed, and so we sort of are looking at a different market to traditional banks.
“From our point of view, the self-employed borrower, you know, gees they’ve endured a couple of really tough years, I guess.
“So, first they had those widespread closures, courtesy of state lockdowns, and then incurred cost for remobilising their workforce or pivoting their business so that they could survive and then obviously losing quality staff and the like.
“So what we’ve sort of seen is they’ve picked themselves up off the canvas obviously and really wanted to get back at running their business and so what we’re sort of seeing coming out of COVID was sort of business owners looking to re-establish their business through mainly an injection of capital.
“And that capital was to be used for a whole myriad of things such as restocking their business, hiring staff.
“At the moment the labour markets are very strong and unemployment is at record lows almost, you know, and trying to attract staff, retain staff and do it at a reasonable price point is very difficult.
“So they’ve had to go to the well and sort of obviously cash up their businesses to cover things to that effect and purchase things like plant and equipment as well.
“So we’ve seen a lot of that.”
[Related: In Focus: Serving the self-employed]
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