Bluestone Bonds Achieve Ratings Upgrade Following Strong Performance


Following strong performance, Bluestone’s securitisation programme enjoyed upgrades of up to 2 ratings.

Bluestone has seen 10 tranches in its Sapphire securitisation programme upgraded by up to 2 whole ratings by credit rating agency Fitch Ratings. The upgrade comes off the back of strong collateral performance and continuous build up in credit enhancement levels.

Long term collateral performance is at the top of Bluestone’s considerations, having seen how even the mild effects of the GFC affected borrowers a decade ago. Since returning to the market in 2013, Bluestone has been focused on building a book that allowed growth during the years of property price appreciation but could also stand up to corrections in property prices, like those we are currently witnessing across Australia.

The key to achieving this stems from the way Bluestone constructs its portfolio. To safeguard continued stability and growth, Bluestone recently hired Stephen Maher as Head of Credit Risk. Stephen, an 18 year veteran of Macquarie Bank, most recently ran the bank’s Structured Credit Research desk.

Bluestone CEO Campbell Smyth said of the appointment, “Having Stephen join the team gives insight into the way we are thinking about portfolio construction. Stephen’s position is unique in the non-bank lending space and will ensure that every loan we write is consistent with our long term portfolio construction aspirations.

“Stephen brings a very unique set of skills and perspective to the non-bank lending space. We will also make Stephen available to investors and other market participants that he has built a strong personal brand with over his years at Macquarie.”

Another factor of the increased credit rating is Bluestone’s continued push into the near prime and prime mortgage markets. Since April 2018 Bluestone has focused its growth efforts primarily on its near prime loan product, with its share of total loan volumes increasing from ~10% to over 40% in just 5 months.

“With the growing opportunities in the space due to the pull back from the banks it is a logical area for the business to expand.  We see this as totally complementary to our non-conforming product, broadening the range of borrowers that we can service. We will continue to write non-conforming loans, although the growth in volumes will not be anywhere near that of near prime,” Smyth said.