Home Capital Group Inc. Announces Pricing of a $425 Million Private Placement of Residential Mortgage-Backed Securities

Home Capital Group Inc. (“Home Capital”) (TSX:HCG) and its subsidiary Home Trust Company (“Home Trust” or “the Company”) announce the pricing of a private placement of residential mortgage-backed securities by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust. The securities are backed by a portfolio of near-prime, uninsured, residential mortgages and are comprised of A, B and Z tranches that aggregate $500 million (the “Series 2019-1 Notes”).

The A Tranche of $425 million will be sold to accredited investors in Canada and the United States by a syndicate led by BofA Merrill Lynch and co-managed by BMO Capital Markets and RBC Capital Markets. The syndicate also includes all of the other major Canadian bank-owned investment dealers. The remaining $75 million of the Series 2019-1 Notes comprised of the B and Z Tranches will be taken up 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 rate of 3.011%. This is Home Trust’s first offering of residential mortgage-backed securities (“RMBS”). The Company expects to close the private placement on September 27, 2019, subject to the satisfaction of customary closing conditions.

“Home Trust is pleased to launch this innovative product in both the Canadian and United States markets. Issuing RMBS, in addition to our existing base of customer deposits and CMHC sponsored securitization programs, represents an attractive funding option for us,” affirmed Brad Kotush, Executive Vice President and Chief Financial Officer at Home Capital. “We expect to be a serial issuer of these securities in the future. Further, we believe that by starting this sustainable program of RMBS issuance we may, with the support of other industry participants, help to establish a private RMBS market in Canada.”

The Series 2019-1 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 Series 2019-1 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 United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Series 2019-1 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 United States to persons other than “U.S. persons” in compliance with Regulation S under the Securities Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Series 2019-1 Notes in any jurisdiction, or an offer to purchase.

About Home Capital: Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of insured residential mortgage products, consumer lending and credit card services. In addition, Home Trust offers deposits via brokers and financial planners, and through a direct to consumer deposit brand, Oaken Financial. Home Trust also conducts business through its wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, we have offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.

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Jill MacRae
Director, Investor Relations
416-933-4991
[email protected]