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BlueZest Secured Retail Bond PLC – LSE listed, 5.25% due 2022

 

BlueZest retail bond

 

 

Specialist mortgage lender BlueZest has today announced the proposed issue of sterling-denominated 5.25% fixed rate secured bonds due 2022; it is the first of a series of bonds to be issued under its £1,500,000,000 secured retail bond programme through which it plans to issue £2-300 million per year.

 

They will be issued by BlueZest Secured Retail Bond PLC, a wholly owned subsidiary of BlueZest Mortgages and Loans Ltd (Blue Zest); the bonds are available to retail and institutional investors and the proceeds of each issue will pass to BlueZest via a loan agreement for the conduct of its mortgage lending business to customers secured against UK residential (non-development) property.

The offer period opened today (27th November 2017) and is expected to close at 12 noon GMT on 12th December 2017; the arranger and dealer, Monsas Limited, retains the right to close the offer early, in conjunction with BlueZest and the issuer.

The bonds are prime, un-subordinated, debt securities; BlueZest is a new mortgage lender so the underlying asset is all UK prime mortgages.

BlueZest is a specialist mortgage lender which utilises its proprietary technology decision-making software solution called the ‘Zest Engine’ in offering a range of carefully tailored buy to let and mortgage products.

The company’s focus is on lending to landlords, developers and small business owners, who have UK residential property to provide as security.

BlueZest offers its clients a supportive business relationship as a preferred financing partner, built around open and honest fee structures, fast decisions and customer-focused operations; the company is committed to delivering what it calls ‘The BlueZest Advantage’.

 

 

Features of the Bonds include:

 

  • Application has been made to admit the Bonds to listing on the Official List of the Financial Conduct Authority and to trading on the regulated market of the London Stock Exchange plc (‘LSE’) and through the Order Book for Fixed Income Securities (OFIS): one of the electronic trading services operated by the LSE for retail bonds.
  • The bonds will bear interest at a fixed rate of 5.25% per annum, with the first coupon payable on 15 June 2018 and then quarterly in arrears on or about 15th September, 15th December, 15th March and 15th June every year until the maturity of the bonds on 15th December 2022 unless previously redeemed.
  • The bonds have a minimum initial subscription amount of £1,000 and are available in multiples of £100 thereafter
  • The bonds, once issued, will benefit from a number of security interests granted by both BlueZest and the issuer, as more particularly described in the previous announcement dated 22th November, the Base Prospectus dated 22th November and the Final Terms dated 27th November 2017 (see more details here)
  • The Issuer has appointed experienced service providers to act as corporate services provider, cash manager, calculation agent, registrar and paying agent
  • The 5.25% bonds due 2022 are expected to be the first series of bonds issued under the programme with frequent issues of 1, 3 and 5 year bonds to follow

 

Security

 

Bonds issued under the programme will benefit from a number of security interests to be granted by BlueZest and the issuer and held on behalf of bondholders and other secured creditors by Capita Trust Company Limited as trustee.

The security package includes (without limitation) security granted over and in respect of:

 

  • Each UK residential property-backed mortgage loan that BlueZest originates using the proceeds of the bonds;
  • A mortgage indemnity guarantee, arranged by BlueZest with AmTrust Europe Limited, a global insurer and part of the ‘A’-rated AmTrust Financial Group. The AmTrust Europe policy, taken out against each mortgage loan that BlueZest originates using the proceeds of bonds, provides insurance against borrower default and subsequent losses suffered by BlueZest; and
  • Certain bank accounts which will be opened with a global financial institution into which the net proceeds of the issue of bonds under the programme will be held (pending utilisation for mortgage loan completions) and collections will be received from customers and held until they are used to pay amounts due on the bonds.

 

Leveraging its management team’s experience of the UK residential mortgage market, its track record in servicing loans and BlueZest’s proprietary straight-through processing technology, BlueZest believes it is well positioned to meet the demands of a buy-to-let market seeking professional and modern lending companies able to provide seamless and rapid turnaround.

BlueZest operates between traditional banks and alternative fund platforms to fill the funding gap that exists in the UK mortgage market, and deliver an innovative proposition for underserved buy-to-let landlords; it boasts a strong team with deep experience in the mortgage lending sector, including some of the key players behind Pepper Home loans and Experian where they spent a few decades building mortgage risk decision systems

In announcing the offer, Chris Slater, Chief Executive of BlueZest commented: ‘The BlueZest Secured Retail Bond arrives at a time when demand in the UK’s residential property market continues to outpace supply. BlueZest is determined to support professional property investors, providing a crucial alternative funding source, enabled by our retail bond.’

‘In the environment of subdued bank lending, we offer a compelling solution for borrowers, our ‘straight-through’ lending process uses innovative technologies and data which can deliver binding mortgage offers in 30 minutes. BlueZest is underpinned by a management team with extensive risk, technology, funding and compliance experience of the UK residential mortgage market, and a strong track record in establishing new mortgage platforms in different markets.’

Demand for retail bonds from investors has been strong, but there has been a dearth of offers of late, particularly on the LSE’s Order Book for Retail Bonds (ORB); if BlueZest announces its programme it is likely to be well supported by those seeking income and the concept of regular issuance may appeal to those that have been thwarted in the past when the offer period of an oversubscribed bond has been cut short.

 

See the press release here

 

BZ table

 

 

 

 

Documents relating to the offer

 

 

Learn about ‘when issued dealing’ on ORB here

Final terms here

See the RNS announcements:

Roadshow

Programme announcement

UKLA base prospectus approval

 

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Authorised distributors:

 

 

 

To learn more about retail bonds visit Retail Bond Expert

 

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IPO/Issue 2

IPO/Issue 3

Information booklet

 

BZ Information Booklet

 

 

Prospectus

BlueZest retail bond

 

 

Roadshow

BlueZest retail bond

 

 

 

 

 

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