Westpac looks set to become the first major bank to sell residential mortgage backed securities (RMBS) in more than two years.
According to an article in The Australian Financial Review, Westpac’s move to secure funds through securitisation could reduce the bank’s reliance on the government guarantee and help satisfy higher funding requirements proposed by the prudential regulator.
The major bank is seeking to raise $1 billion and could be initiated as early as today.
The Westpac deal is being marketed at a margin of 130 basis points over the benchmark swap rate for the top rated tranche.
The deal, which could place extra pressure on mortgage and business lending rates, is being structured so as to minimise exposure to mortgage insurers.
It is understood the loans included in the securitisation pool will be those originated by St George Bank before the merger was announced in May 2008, when the second tier lender had $15.5 billion in securitised mortgages.
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