AFG prices record $1bn RMBS deal

The upsized AFG 2022-2 Trust issue is AFG Securities’ 15th transaction since 2013, taking the total paper issued to the market by AFG Securities to AU$7.5 billion.

“This is our largest issue to date, upsizing from $500 million to $1 billion thanks to the support of both domestic and international investors,” AFG chief executive David Bailey said.

“In a challenging market, this result is a testament to our depth of understanding of the market and structure of our book to ensure we bring high quality, reliable paper to investors. AFG Securities offers an exceptional lending alternative with industry-leading credit quality delivering a sound investment opportunity to the securitisation market. The upsizing of this transaction to $1 billion clearly demonstrates that value,” he said.

Mr Bailey noted that mortgage brokers have once again increased their market share and continue to be the dominant channel in the Australian home lending market.

“As the market reacts to a rising interest rate environment, brokers are only going to be more important to their customers as they help them navigate the changes,” he said.

“AFG Securities’ provision of a competitive lending alternative provides choice for Australian homebuyers and drives much-needed competition in the mortgage market.”

It comes after the company's financial results for 2022 confirmed a “strong” position, despite the losses incurred by the Volt cessation.

Volt Bank’s cessation hit the company’s bottom line by $15 million, bringing total impairments in the financial year 2022 to approximately $21.3 million (after tax).

AFG Securities direct lending settlements were up 102 per cent to $2.7 billion, with a loan book up 41 per cent to $4.8 billion. Its white label settlements were also up 36 per cent to $2.9 billion, with its loan book up 8 per cent to $8.5 billion.

In a trading update, the company said it expects a net profit (after tax) of $61.3 million, which excludes adjustments made from the Volt Bank closure and additional technology impairments.

[Related: AFG's bottom line hit by Volt closure]