Powered by MOMENTUM MEDIA
the adviser logo
Broker

YBR makes progress on $300m securitisation initiative

by Charbel Kadib5 minute read
YBR

The third-party mortgage and advice business is one step closer to securing a $300 million RMBS warehouse facility after it entered into a non-binding agreement with an unnamed funder.

Yellow Brick Road (YBR) has provided an update to shareholders regarding its proposed mortgage securitisation program, which it commenced in September 2018.

YBR has now announced that it has entered into two separate non-binding term sheets (statement outlining the terms and conditions of the agreement) relating to the establishment of the securitisation business, which would fund its initial working capital requirements, as well as the initial $6 million subordinated/first loss C Note required for that RMBS warehouse facility.

According to YBR, the first term sheet is with an US$13 billion alternative asset manager counterparty who, in return for a 50 per cent equity interest in YBR’s Resi Wholesale Funding (RWF), would provide and/or arrange:

Advertisement
Advertisement
  • AUD$18 million in ordinary equity in RWF in two tranches; and
  • a facility for a combined AUD$64 million in future funding for C Notes and/or B Notes for the RMBS Warehouse Facility.

The group added that the second term sheet is with a private Australian counterparty, who “amongst other things”, would provide a back-up facility for another AUD$20 million in future funding for C Notes for the RMBS warehouse facility.

YBR noted that each term sheet is subject to completion of final due diligence and finalisation of definitive legally binding transaction documentation, which the group said has already commenced.

Once definitively agreed and implemented, the group said that the funding arrangements would satisfy a “major commercial condition” precedent to the RMBS warehouse facility.

YBR added that any drawdown of the RMBS warehouse facility and commencing a securitisation program would be further subject to the completion of definitive legally binding transaction documentation with the warehouse lender and all other relevant third parties, and subject to satisfying any other related conditions that may be included in such transaction documentation.

Commenting on the progress of the initiative, YBR executive chairman Mark Bouris said that once completed, it would enable the group to capitalise on growing demand for alternative finance.

“This is a major milestone on our journey to commence a securitisation business in Australia.

“It proves up the unseen value of our YBR and Vow distribution network and will come at a time when the market is seeking alternative funding for home loan lending in Australia.”

Mr Bouris has previously stated that the program would be a “key value-enhancing component in YBR’s overall mortgage strategy”.

YBR’s announcement follows last month’s release of the group’s unqualified audit-reviewed half-year report for the six months to 31 December 2018.

The figures show a net loss after tax (NLAT) of $34.15 million, which largely comprises a non-cash asset write-down of $33.95 million ($30.96 million after tax) on the carrying value of the wealth management and lending business – as well as other intangible assets across the group.

[Related: YBR head confident for the future]

ybr parramatta ta

Charbel Kadib

Charbel Kadib

AUTHOR

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

PhilipLowe mb

RBA attempts to curb runaway inflation

On Tuesday (5 July) the Reserve Bank of Australia (RBA) announced at its monetary policy meeting it will increase the...

READ MORE
flood qld suburbs ta

Home loan support offered to NSW flood victims

Widespread persistent heavy rain over large swathes of NSW over the weekend and into Monday (4 July) has caused major...

READ MORE
Dr Jane Rennie CPA

Accountants to decline ‘capacity to repay’ requests

The leaders of CPA Australia, the Institute of Public Accountants (IPA), and the Chartered Accountants Australia and...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more