The Humm Group Ltd (ASX: HUM) share price will be one to watch on Thursday.
This follows the release of an announcement by the financial services company just as the market closed on Wednesday.
What did Humm announce?
This afternoon Humm announced the pricing of $450 million of asset-backed securities (ABS), which is significantly more than previously planned. These are supported by a pool of fully amortising, secured commercial auto and equipment finance receivables.
According to the release, strong investor demand enabled a upsize of $150 million over the launch amount previously flagged in February. The receivables are originated through flexicommercial.
The release explains that the flexicommercial ABS Trust 2021-1 represents the second ABS transaction in FY 2021 for Humm. It is also the third securitisation of receivables originated through flexicommercial.
Following the close of this transaction, Humm will have issued $700 million of ABS notes during FY 2021.
Humm's Chief Financial Officer, Jason Murray, commented: "We are extremely pleased with the market appetite for this transaction which was oversubscribed across all note tranches and is testament to the quality of the underlying receivables being securitised."
"Considering the significant demand from investors, the transaction was upsized to A$450 million, representing the largest hummgroup ABS transaction and raising to date."
"The strong demand also led to a tightening of pricing across all tranches and reflects that investors continue to seek high quality assets in a low interest rate environment. The pricing and successful completion of this transaction is an important step in the strategic review of flexicommercial, to increase the capital efficiency of the business. This will also provide a material capital release for hummgroup."
The Humm share price is underperforming in 2021 and down 12% year to date. This compares to gains of 53% by Zip Co Ltd (ASX: Z1P) shares and 26% by Sezzle Inc (ASX: SZL) shares.
