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CUA raises $700 million in latest investor funding deal

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Australia’s largest credit union, CUA, announced today that it has raised $700 million in wholesale funding from its latest securitisation, hot on the heels of a successful Medium Term Note issuance only six weeks ago.

CUA Deputy Treasurer Tim Moore said the member-owned organisation was attracting significant investor interest and had committed to going to the investor market with these kind of Residential Mortgage Backed Security (RMBS) deals at least once per year. CUA’s last RMBS deal in June 2017 raised $900 million in funding.

Mr Moore said the Series 2018-1 Harvey Trust RMBS had attracted a good mixture of domestic and offshore investor interest, following a recent roadshow to meet with investors in the United Kingdom, as well as major Australian capital cities.

After considering current funding needs, the strength and quality of the order book enabled CUA to upsize the deal by $200 million to $700 million.

Industry speculation that house prices in key markets such as Sydney and Melbourne could fall further in the coming 12 months didn’t deter investors, who took confidence in CUA’s relatively conservative home loan portfolio and the structure of the deal.

Against the challenging backdrop of falling global equity markets, this ability to upsize the deal to $700m, from initial plans to raise around $500m, was a great outcome for CUA.

“To have had such a strong investor response to this funding deal, only six weeks after we raised $200 million via a Medium Term Note and during such market volatility is further reinforcement of the work CUA has done to elevate its profile in the investor market,” Mr Moore said.

“CUA has demonstrated strong financial performance over the past year, including strong home loan growth through both mortgage brokers and organic channels, and the performance of our home loan portfolio has a solid track record.

“The funding raised from this RMBS deal will help support the strong lending growth we have seen over the past 6 months, and which has continued into the residential property market’s peak spring season.

“Our commitment to investing in innovation and member experience improvements, while providing the personalised service that members have come to know and trust, is really resonating with new members. We’ve seen that translate into strong member growth and improvements in member advocacy measures over the past year, and we are confident we will see that continue in FY19.”