The Balmain (MMT Mortgage) Trust will be relaunched in November and will be the first mortgage trust to reopen since the sector froze last year due to the government bank guarantee.
"The sector froze 12 months ago - being apolitical about it - as a direct consequence of the sovereign guarantee not being extended to mortgage trusts. There was a heightened request for redemptions which the sector couldn't meet," Balmain (MMT Mortgage) Trust chief executive John Thomas said.
The relaunched Balmain (MMT Mortgage) Trust will be a term investment, rather than an on-call investment where money is locked up for three years at a variable rate.
"We believe that interest rates are on the way up, so investors can expect their investment to go up," Thomas said.
Existing investors will also have a new offering to consider.
"They can stay where they are and we will pay 4 per cent back each quarter or convert to a 36-month investment. With that, there is the capacity to get 10 per cent of your existing capital out every 12 months with no penalty," Thomas said.
According to Thomas, if the Balmain (MMT Mortgage) Trust is successful in raising new money, it will allocate 25 per cent of any new net inflows into an accelerated redemption pool to help investors get their money back more quickly.
"My view is if we don't do something about reopening the mortgage trust sector, then we'll just see it quietly fall apart in the next five years and this is not what I want to see," Thomas said.
The Balmain (MMT Mortgage) Trust was formerly known as the Mariner Mortgage Trust (MMT).
In December 2008, Balmain NB Corporation (Balmain) entered an agreement with Mariner Mortgage Management to acquire the management rights of the MMT and the Mariner Wholesale Mortgage Trust and to replace Mariner Securities as the responsible entity of the funds.
At the time of the agreement, the two Mariner funds had approximately $155 milion in funds under management.
