Wednesday 25th January 2017
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Turners, the country's largest seller of vehicles, is to sell stakes in its loan book in a deal worth an initial $150 million.
As well as selling cars and trucks and lending people money to buy them, Turners owns Dorchester Finance, Oxford Finance and Southern Finance, which loan money to individuals and businesses.
The process is known as securitisation and sees the loan originator pool the value of the loans to create a fund. Investors buy stakes or tranches in the fund, and are entitled to the income from the loans as the money is repaid by the debtor. The role of securitisation came to prominence after the global financial crisis, because many of the risky mortgage loans made in the United States to people who couldn't repay them had been bundled up and onsold to investors around the world. They went from being seen as secure as the debt of the US government to being largely worthless overnight, crashing financial markets.
In a statement to the NZX, Turners said the securitisation programme had been arranged by Bank of New Zealand, and covered loans made by Dorchester Finance, Oxford Finance and Southern Finance, as well as the recently established MTF (Motor Trade Finance) Partnership channel.
Todd Hunter, chief executive of Turners, said securitisation had been a core funding strategy for the business for some time and they were pleased to receive credit approval for the programme.
“The high quality of our consumer loan portfolio has directly enabled us to achieve commercial terms with the Bank of New Zealand that accommodate the majority of the Turners Group receivables, and provides committed funding to the Group at a competitive rate, with the structure able to accommodate future growth opportunities."
The securitisation programme is to start in February, with the first sales due to occur in March.
Shares of Turners rose 0.3 percent or 1 cent to $3.80. They've risen 8.2 percent since the start of the year.
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