HMY - Harmoney Corp Limited

[Snow Leopard]

Important question is:
Have Percy and I set a floor price and the uptrend now commences?

The disconnect between the SP on the ASX & NZX is weird.

[percy]

Important question is:
Have Percy and I set a floor price and the uptrend now commences?

The disconnect between the SP on the ASX & NZX is weird.

Perhaps ASX selling is for tax reasons,ie their tax year ends end of June.

[Rawz]

HMY should delist from ASX...

[percy]

HMY should delist from ASX...

I think HMY,HGH and TRA are listed in Aussie, as a lot of Aussie intos can only lend to Aussie listed companies.

[Rawz]

I think HMY,HGH and TRA are listed in Aussie, as a lot of Aussie intos can only lend to Aussie listed companies.

Ah okay that makes sense.

Problem for the SP is that the aussie side has dragged the nz side down since listing. NZ price always higher but ends up following the aus down down down

[Balance]

Ah okay that makes sense.

Problem for the SP is that the aussie side has dragged the nz side down since listing. NZ price always higher but ends up following the aus down down down

Means that the ASX is the driver of the sp - just as it is with stocks like ATM & FBU.

[jimdog31]

that's more or less how I understand it. They don't provide the underlying documents so I can't be sure. But broadly speaking the ABS is structured via a trust and organised via a number of difference classes of notes by credit worthyness. IE class A at Aaa, class B at Aa2, down to class F, and finally class G notes which are notes held by Harmoney, and incrementally subordinated to each other. There is a bit of a repayment waterfall structure as stepdown conditions are satisfied

HMY's first ABS was in October last year. It was ~A$100m or about 60% of the aggregate australian book at the time. What it did to the cost of funds was incredible: they paid only 1.45% margin ontop of the base rate they hedged . That's an incredible margin - I checked in with some friends active in the market and they were seeing 1.80% margins for long term mortgages securitisations, and 3% for short term (less than 18mnth) mortgages. Credit enhancements (ie how much cheaper you loans get once moving to an ABS structure) are usually 15-30% - this was a lot more.

Warehouse get the name because they are designed to hold loans while sufficient quantities are built up to then term them via some securitisation structure like an asset backed security. Warehouses aren't always termed out but its usually the goal as securitisations typically provide lower cost of funds and a higher advance rate. Re the later point, for warehouse lending HMY typically writes loans with 10% equity and 90% drawings on a warehouse facility - an ABS cuts that in half to only 5% equity required from HMY

ABS' amortise as they repay so its a closed pool of funds, so all else equal they amortise to zero, and another ABS is required at some future point (thats why they get referred to as an ABS programme, or securitisation programme). Not unusual to have several securitisations running concurrently at different stages of run down. While that's a bit of hassle (and cost due to up front & bookrunner fees, legals) because its a closed pool it allows it to be rated by a ratings agency. Last years ABS was rated by Moody's.

Been a while since I last looked but I think the ABS market for non bank lenders has slowed a lot - the only things I last saw getting written were for vehicle secured lending.

The way wholesale costs have risen I think margins will have risen so the credit enhancement from getting an ABS could have waned from last year. Plus, the securitisation market wants big books, usually +$100m, so likely the NZ book could also be just to small at the moment. They were keen on a NZ ABS but CCCFA came in and slowed the market down.

Its encouraging though to see a big new warehouse facility for new zealand.

http://research.iress.com.au/IDS/old...091850000&ppv=

The competition WZR just got an ABS Facility recently.

How does this stack up to our latest announcement?

[Muse]

http://research.iress.com.au/IDS/old...091850000&ppv=

The competition WZR just got an ABS Facility recently.

How does this stack up to our latest announcement?

ooh that is good to see - unsecured consumer too.

The facility HMY announced yesterday was a warehouse facility, which is sorta the intermediate step before moving some of the funds housed in it to an ABS, and as far as I know from the announcement they didnt provide any terms. This WZR one is an ABS so I've compared it to HMY's ABS from oct 2021.

weighted average margin of 2.23% here vs 1.45% harmoney achieved last year. Impossible to know if Harmoney's margin is lower because it did a better job at securing it, or if margins just have drifted up (and lenders now demanding more return for their lending). I suspect the later plays a big part in it

WZR's margin over a 3 month bank bill rate, vs harmoney on the 1month bank bill rate. traditionally a 1 month bill rate will be cheaper in a rising interest rate
environment, but regardless both will have been hedged. I'm pretty sure westpac hedged harmoneys (which i read in some moody report).

the weighted average credit enhancement from WZR's abs looks to be 35% which is about the same HMY's achieved (34%)

good to see these still occurring at good levels of credit enhancement even if margins are going up. These can do so much to optimise and loser HMY's cost of funds and widen NIM. Lenders want to see a track record and some history

that's a big ABS - $250m. probably the size banks are after.

[Balance]

New low.

What's happening?

Serious question.

[dubya]

New low.

What's happening?

Serious question.

It was me buying . I put the order in the other day..... didn't think a seller would come down.
Bit of a punt.