SocietyOne closes inaugural $182m ABS bond issue

  • By Elizabeth Fry

Consumer lender SocietyOne has launched am oversubscribed $182 million asset-backed securities bond issue reflecting the strong demand from the capital markets. 

This issue was backed by a high-quality pool of unsecured personal loans as collateral and was split into eight classes. 

The $118 million senior tranche of the issue, rated AAA by Moodys was cleared at an issue margin of 75 basis points.  

The digital finance platform said demand for the AAA tranche was diverse, with notable investors including one offshore asset manager, three local asset managers, and two local large bank balance sheets. One hundred percent of the mezzanine tranches were successfully pre-sold to a local large fund manager. 

The deal involved the transfer of short-term debt from the SocietyOne $230 million warehouse facility arranged by National Australia Bank in late 2019 to long-term debt. 

The issue will likely be the first of a regular program of capital markets issuance in the ABS market by SocietyOne, reducing funding costs, improving profitability, and enabling more competitive borrowing rates for its customers. 

The strong performance of the deal demonstrates the maturation of SocietyOne’s digital finance business and the quality of its origination and servicing operations. 

"This {the bond issue} is a natural progression for SocietyOne and reflects the quality of our credit and the maturation of our business model. It is a strong indicator that our brand and products are ready for the broader global and institutional capital markets, said Mark Jones, SocietyOne’s chief executive. 

“The addition of an asset-backed securities trust provides valuable funding diversity and opens us up to significant growth opportunities. It will continue to fuel originations growth, which is on track to surpass $1.5 billion in the coming months. 

“What will always remain consistent is our commitment to providing our customers with a better deal and simple, fast, high-quality experience.”  

First-rate margins 

John Cummins, the SocietyOne's investment chief added that the margins achieved were first-rate, and the fact that the issue was 2.4 times oversubscribed reflects of the quality of the loan collateral and resulting support from investors. 

Since launching in August 2012, SocietyOne has provided over $1 billion in total lending and has helped more than 35,000 borrowers. Its broker distribution channel has also driven more than $70 million in loan originations since its launch 16 months ago.  

SocietyOne offers fixed rate secured and unsecured personal loans between $5,000 and $70,000, over terms of 2, 3, 5, or 7 years. Its free credit score product helps customers know their score, understand how it works, and learn how to improve it through clear and simple insights.  

The fintech's shareholders include News Corp Australia, Seven West Media, Consolidated Press Holdings, Reinventure Fund (Westpac's venture capital arm), EISS Super, and several credit unions and mutual banks.