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Australian non-bank lender sells first ever Chinese borrower-backed bond

Australian non-bank lender Columbus Capital has sold the first ever batch of mortgage bonds backed primarily by home loans to Chinese investors, funding operations in a segment that has been abandoned by the country's four major banks.

By Paulina Duran

SYDNEY, Sept 2 (Reuters) - Australian non-bank lender Columbus Capital has sold the first ever batch of mortgage bonds backed primarily by home loans to Chinese investors, funding operations in a segment that has been abandoned by the country's four major banks.

The A$250 million ($168.85 million) residential mortgage-backed bond deal had been popular among Australian, European and Asian investors, Columbus' treasurer, Karl Sick, said on Monday.

"In hindsight, we could have done a larger transaction," Sick told Reuters in a phone interview.

"There is still a strong appetite in Asian countries to hold assets in other jurisdictions. This drives the acquisition of real estate in countries like Australia."

The bonds are backed by 719 loans to properties in the eastern Australian states, 84% of which were to Chinese residents.

Australia's four largest lenders dominate the country's home lending market, but higher capital requirements and regulatory restrictions on risky lending have caused them to halt lending to foreign investors.

"The Aussie banks have shied away from this sector so this transaction is evidence that non-banks are filling that funding gap," said Calvin Leong, a director at S&P Global Ratings.

Leong said higher capital requirements made it difficult for banks to lend to offshore investors, while it was also harder to verify the ability of non-residents to repay the mortgages.

(Reporting by Paulina Duran; Editing by Sriraj Kalluvila)

((paulina.duran@thomsonreuters.com; +61 2 9321 8177 ; Reuters Messaging: paulina.duran.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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