Home Capital Prices $425 Million in Residential Mortgage-Backed Securities

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Home Capital Group Inc. and its Home Trust Company subsidiary have announced the pricing of a private placement of residential mortgage-backed securities (RMBS) to be issued by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust.

The securities are backed by a portfolio of near-prime, uninsured residential mortgages that were originated by and will be serviced by Home Trust. The securities comprise A, B and Z tranches that aggregate $500 million (the Series 2021-2 Notes or Notes).

The A tranche of Notes totaling $425 million will be sold to accredited investors in Canada and the United States by a syndicate co-led by BofA Securities, BMO Capital Markets and RBC Capital Markets. The remaining Series 2021-2 Notes comprising the B and Z tranches totaling $75 million will be retained by Home Trust.

The A tranche is expected to be rated AAA (sf) by DBRS and Aaa (sf) by Moody’s and will bear interest at an annual interest rate of 1.528%. This is Home Trust’s third offering of cross-border residential mortgage-backed securities. The company expects to close the private placement on or about October 19, 2021, subject to the satisfaction of customary closing conditions.

“Home Trust’s RMBS program continues to be positively received by Canadian and US investors,” comments Brad Kotush, executive vice president and CFO at Home Capital. “Our planned programmatic issuance of RMBS is an important element of diversifying our sources of funding on competitive terms.”

The Notes will not be qualified for distribution to the public under the securities laws of any province or territory of Canada and may not be offered or sold in Canada, directly or indirectly, other than pursuant to applicable private placement exemptions. The Notes have not and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold in the U.S. absent registration or an applicable exemption from the registration requirements of the Securities Act.

The Notes are being offered in a private placement, solely to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act, or outside the U.S. to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act.

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