Bluestone polishes mortgage jewel

Bluestone Equity Release will tomorrow close its second reverse mortgage securitisation, the Emerald II Reverse Mortgage Series 2007 trust fund.

A total of $124.2 million in AUD-denominated notes have been issued to institutional investors in three tranches, all secured in the pool of Bluestone’s reverse mortgages.

The tranches comprise $102.6 million in AAA rated notes, $11.2 million rated AA and $10.4 million rated A — with 75 per cent of the total placed domestically, and the balance in Europe.

The notes were oversubscribed between 2.5 and six times, depending on the tranche, according to Bluestone chief executive Peter McGuinness.

Spreads tightened between 25 and 45 per cent across the three tranches, he added, compared to Emerald I, which last year became Bluestone (and Australia’s) first-ever reverse mortgage securitisation.

“This reflects the increased confidence of investors looking at Bluestone Equity Release as an originator, and also in the asset class more generally.”

In turn, McGuinness said Bluestone customers now have “the confidence of knowing that their future loan advances are backed by AAA rated funding”.

The securitisation is the “first reverse mortgage deal in Australasia to have been rated by all three rating agencies”, he said.

It is supported by a $71 million liquidity facility, and $29 million of “committed and further advance facilities” — all provided by Barclays Capital, which arranged the deal.