Home Capital Group Inc. Announces the Closing 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 closing of a $425 million private placement of residential mortgage-backed securities (the “Series 2019-1 Notes”) by Classic RMBS Trust, a securitization vehicle sponsored by Home Trust. The Series 2019-1 Notes 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 A Tranche of $425 million was sold to accredited investors in Canada and the United States. The remaining $75 million of the Series 2019-1 Notes, composed of the B and Z Tranches, was taken up by Home Trust.

The A Tranche is rated AAA(sf) by DBRS and Aaa(sf) by Moody’s. It was priced at a 145 basis point spread over the comparable term Government of Canada bond curve equating to a semi-annual equivalent yield of 3.03%.

The monthly coupon for the A Tranche has been updated to an annual interest rate of 3.064%, which was increased from the 3.011% previously announced to account for the delayed payment schedule that is typical for Canadian residential mortgage-backed securities in order to reflect the semi-annual equivalent yield agreed with investors.

“We are pleased with the positive response our RMBS issue has received from a broad base of institutional investors,” stated Brad Kotush, Executive Vice President and Chief Financial Officer at Home Capital. “The support for our inaugural RMBS issue gives us confidence in planning for subsequent RMBS issues and further growth in the 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 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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190927005351/en/

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