Avanti consolidates its presence
New Zealand’s securitisation market is ready for expansion as more investors come into the space and regulatory-driven evolution looms. Paul Jamieson, group treasurer at Avanti Finance (Avanti) in Auckland, says the company is in position to exploit the opportunity to fund and deliver a bigger lending book.
Avanti priced its second residential mortgage-backed securities (RMBS) deal in June this year having completed its inaugural transaction in 2018. How would you compare and contrast the two, especially with regard to investor response and distribution?
Avanti is involved in personal and auto finance but both its public capital-markets transactions to date have been in RMBS format. How far away is the company from bringing a nonmortgage securitisation deal to market? Would New Zealand investors be equally receptive to a nonmortgage asset-backed securities (ABS) offering from Avanti?
New Zealand ABS has generally been popular with New Zealand and Australian investors, and other issuers have led the way in that space in the last few years. We believe an Avanti ABS transaction would be well received and would build on our solid reputation as an originator and servicer of consumer debt across ABS and RMBS.
What is Avanti’s expected future funding strategy? How often do you expect to be active in public markets and at what sort of scale?
Our mortgage- and auto-lending books are growing strongly, to the extent that they facilitate regular issuance. We expect to come to market next year with a third RMBS structure and also to bring our first ABS deal, most likely early in 2020.
Australian nonbanks have undertaken a lot of global investor-relations work. New Zealand’s domestic securitisation market is relatively less mature than the Australian equivalent, so does engaging with international investors play a role in your funding strategy?
We have investors in Australia and we also get occasional interest from investors in Asia. So far, we have not spent a lot of time courting these investors – the interest we come across has been driven more by reverse enquiry.
How well understood is the nonconforming lending sector in New Zealand capital markets? Australian nonbanks often feel they have to do a lot of mythbusting with investors, battling comparisons of their loan books with things like US subprime.
It has to be said, though, that educating parties and spending time explaining Avanti’s business is all part of the process of building the relationships necessary to issue in capital markets.
nonbank Yearbook 2021
KangaNews's sixth annual guide to the business and funding trends in Australia's nonbank financial-institution sector.