ME Bank is set to become the first lender to re-enter the residential mortgage backed securities market without government support.
According to a report in today's The Australian Financial Review, the bank, formerly known as Members Equity, is expected to issue $200 million to $300 million of AAA rated RMBS at about 175 basis points over the swap rate under the Maxis Securitisation Fund.
The issue will be one of the first public RMBS issues globally over the past year and is a sign that the securitisation market might be improving after almost $8 billion of Australian government investment.
The Australia Office of Financial Management (AOFM), which is in charge of the government’s support program, has invested $7.4 billion as a cornerstone investor across 17 mandates since the program’s inception in September last year.
Australian Securitisation Forum deputy chairman Patrick Tuttle told Mortgage Business if the deal is real and above board it is a very encouraging sign for the industry which has been relying on government support to date.
“If the deal goes ahead it will be the first sold to real money investors, without AOFM support, since the end of 2007,” Mr Tuttle said.
“This is what the government has been waiting for, signs of life in the market. That said, I do not think the work of the government is done. If the AOFM can provide a liquidity facility it will provide further encouragement for investors to come back to the market.”
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