ColCap’s Ilias Pavlopoulos (COO) & Andrew Chepul (CEO)
Sydney-based non-bank lender ColCap is on track to price a record $2.7 billion residential mortgage-backed securities (RMBS) deal, the largest ever from an Australian non-bank and well above its initial $1 billion target.
An RMBS transaction works by bundling thousands of home loans into a pool and issuing bonds backed by the mortgage repayments. Investors receive interest funded by borrowers’ repayments, while the lender frees up capital to write new loans. In this case, the securities are backed by a diversified book of Australian prime mortgages, including owner-occupied, investment and SMSF loans.
Strong demand from both domestic and offshore institutional investors, likely including banks, insurers and Asian and European fixed-income funds, drove the deal size higher during bookbuilding. Final pricing is expected at around 0.95% above one-month BBSW, an attractive spread for highly rated Australian mortgage credit.
One notable feature is a five-year note designed to provide duration certainty and reduce reinvestment risk for investors, a structure that broadens appeal to long-term capital.
The broader signal? Global investors are still eager to fund Australian housing credit at scale. For ColCap, locking in a large parcel of term funding lowers its cost of capital and allows it to compete aggressively on mortgage rates. For the housing market, deep RMBS demand suggests that, despite rate pressures on borrowers, funding conditions for lenders remain robust.
