Judo Bank shares rally after $750m SME loan securitisation
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The news: Shares in Judo Bank surged in afternoon trade after the challenger bank priced a $750 million capital-relief securitisation backed by SME loans, increasing the deal size from an initially planned $500 million amid strong investor demand.
Shares jumped 10.8% to $1.59 at 12:50pm AEST.
The context: The notes were priced at a weighted average margin of 171 basis points above the one-month bank bill swap rate, compared with 102 basis points on the bank’s inaugural 2023 transaction. The deal is expected to deliver a 25 to 30 basis point uplift to FY27 return on equity.
Judo said the transaction qualifies for regulatory capital relief and will lift its pro forma common equity tier 1 ratio to 13.2%, up from 12.6%, as at March 31. The underlying SME loans will remain on the balance sheet for income recognition purposes.
The bank said the transaction will strengthen its capital position and provide increased flexibility to support future lending growth. Settlement is expected on 4 June.
What they said: “The transaction also demonstrates that we have multiple levers to actively manage capital, providing increased optionality, including the potential to consider capital management initiatives in due course,” Judo CEO Chris Bayliss said.
The source: ASX
