Transaction paves way for 'Australia’s first' green auto bond
Firstmac has completed a $475 million auto bond issue which provides details on the amount of CO2 emissions from each car it is secured against.
In response to strong investor demand, the non-bank lender said the asset-backed security transaction was increased from $300m to $475m. Pricing on Class A of the residential mortgage backed security (described as the most senior or lowest risk portion of mortgages) was at 1.75% over the bank bill swap rate, the company said.
Dubbed as an “Australian-first”, Firstmac said the transaction opened the door for the company to issue a green auto bond in future. The bond would be secured only against electric or hybrid vehicles with low emissions, targeting eco-focused institutional investors, Firstmac said.
Firstmac CFO James Austin (pictured above) said the bond issue marked the first auto asset-backed security issued by Firstmac and was consistent with efforts to minimise the impact of its business operations on the environment.
Emissions transparent auto bonds were a “useful tool”, in line with Firstmac’s ambition to mitigate climate change, he said.
“We were very pleased with how the issue was received by investors, with strong support in the market enabling us to substantially upsize the issue and secure our funding for auto lending well into 2023,” Austin said.
Suited to eco-conscious borrowers, Firstmac’s Green Home Loan offered a discount of up to 1.58% for builders of energy-efficient homes, he said. Additionally, Firstmac offered a 0.7% discount for buyers of hybrid or electric vehicles. Both loans have the backing of the federal government’s Clean Energy Finance Corporation (CEFC).
Car lending had experienced rapid growth over the last year, with regular monthly settlement records set in the second half, Firstmac said.
Independently owned, Brisbane-based Firstmac has written over 130,000 home loans and has $16bn in loans under management.
The bond issue was priced on November 25 and settled on December 8.
Firstmac’s auto bond issue follows recent capital raising efforts by other non-bank lenders including $500m capital raise by self-employed specialist lender RedZed and a $750m capital raise by La Trobe Financial.
