Home Capital closes previously disclosed RMBS transaction

A $425 million tranche was sold to accredited investors in Canada and qualified institutional buyers in the United States

Home Capital closes previously disclosed RMBS transaction

Home Capital Group and its subsidiary Home Trust Company have announced the closing of a previously disclosed private placement of residential mortgage-backed securities.

The “Series 2021-2 Notes” securities were issued by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust. These notes are backed by a portfolio of near-prime uninsured residential mortgages, the company said.

The securities are comprised of what Home Capital described as “A, B, and Z tranches”, and hold an aggregate value of $500 million.

“The healthy investor demand for this RMBS offering demonstrates continuing market support for this program,” said Brad Kotush, executive vice president and chief financial officer at Home Capital. “We expect that programmatic RMBS issuances will be a sustainable element of our ongoing funding strategy.”

Read more: Home Capital might sell “riskier” notes in future RMBS offerings

The A tranche amounting to $425 million was sold to accredited investors in Canada and qualified institutional buyers in the United States, Home Capital said. This tranche was rated AAA(sf) by DBRS and Aaa(sf) by Moody’s, and carried an annual interest rate of 1.528%.

The remaining $75 million comprised of the B and Z tranches was retained by Home Trust.

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