Pepper Money raises £545M through the capital markets
What's the deal? UK specialist lender Pepper Money has raised £545M through the capital markets via a residential mortgage-backed securities (RMBS) transaction. The deal, issued under its Polaris securitisation programme, packaged a pool of UK residential mortgage loans — a mix of owner-occupied and buy-to-let mortgages — and sold them to investors.
It marks the company's third RMBS transaction this year. The funding will support Pepper Money's continued lending to borrowers it says are underserved by traditional lenders.
Why now? Pepper Money is building a track record as a consistent capital markets issuer, even amid market volatility and geopolitical uncertainty. Andy Voss, chief financial officer at Pepper Money, said the deal "marks another important milestone in the growth of our capital markets programme, supporting our ambition to be a consistent, through-the-cycle issuer."
The transaction attracted broad investor demand, which Voss said reflects "confidence in our platform."
What could go wrong? RMBS deals carry inherent risks tied to the underlying mortgage pool's performance. A downturn in UK housing or rising borrower defaults — particularly among the specialist lending segments Pepper Money targets — could weigh on investor appetite for future issuances. Ongoing geopolitical instability and rate uncertainty add further headwinds.
The signal: Pepper Money's ability to complete three RMBS transactions in 2025 alone, while still at the late growth stage according to Dealroom, underscores how non-bank specialist lenders are scaling rapidly by leaning on securitisation rather than deposit funding. Repeated investor oversubscription in a volatile rate environment suggests the market sees durable demand for UK specialist mortgage credit — a segment mainstream lenders continue to vacate.
Read more: modernlender.co.uk
