Home Capital secures cheaper credit line from two Canadian banks
The hot real estate market in Toronto and the surrounding areas pushed home sales up 27.7 per cent in February compared with the same month a year ago. (Graeme Roy/The Canadian Press)
The Canadian Press
Published Wednesday, May 16, 2018 11:15AM EDT
TORONTO - Home Capital Group Inc. has secured a $500-million standby credit line from two unnamed Canadian banks to replace its more costly emergency funding facility from Warren Buffett's Berkshire Hathaway Inc.
The Toronto-based alternative mortgage lender says its subsidiary Home Trust Company has inked a letter of commitment from two Canadian Schedule 1 banks for the two-year secured line of credit facility.
Home Capital's chief financial officer Brad Kotush says this new credit line has a lower aggregate cost than its current $2-billion funding facility, which matures at the end of June.
Last June, Buffett's investment firm bought a stake in Home Capital Group and provided its subsidiary with a $2-billion line of credit.
The credit line gave the Toronto-based lender some much needed liquidity after it faced a run on deposits, amid allegations of misleading disclosure to investors.
Kotush says Home Capital has sufficient liquidity and has significantly reduced its reliance on demand deposits, and does not intend to draw on the new, cheaper credit facility.