The securities will be backed by a portfolio of near-prime uninsured residential mortgages originated by Home Trust
Home Capital Group and its subsidiary Home Trust Company have announced the pricing of a private placement of residential mortgage-backed securities (RMBS) to be issued by the Home Trust-sponsored Classic RMBS Trust.
With an aggregate value of $500 million, these RMBS are backed by a portfolio of near-prime uninsured residential mortgages originated and serviced by Home Trust, the company said. This will be the firm’s third offering of cross-border residential mortgage-backed securities.
The first batch of notes, designated the A tranche, amount to $425 million and will be sold to accredited investors in Canada and the United States by a syndicate co-led by BofA Securities, BMO Capital Markets, and RBC Capital Markets, with an annual interest rate of 1.528%. This tranche is expected to be rated AAA (sf) by DBRS and Aaa (sf) by Moody’s, Home Capital said.
The remaining $75 million in notes, comprising the B and Z tranches, will be retained by Home Trust, the company said.
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“Home Trust’s RMBS program continues to be positively received by Canadian and US investors,” said Brad Kotush, executive vice president and chief financial officer at Home Capital. “Our planned programmatic issuance of RMBS is an important element of diversifying our sources of funding on competitive terms.”
Home Capital is expecting to close the private placement on or around Oct. 19.
