By: Staff Reporter
In a bid to increase market transparency, competition and support for small business lending, the Australian Office of Financial Management (AOFM) has announced it will change its approach to the pricing of its investments in RMBS.
According to an announcement yesterday, the AOFM has moved to push down RMBS prices as a result of changing market conditions.
Reductions in issuance costs for issuers and increased private sector investor participation have also been factors behind the decision.
“Given the high credit quality of Australian RMBS and the program objectives, the AOFM is willing to invest at tighter levels,” the statement said.
“But this will continue to be balanced with the desire to encourage continued private sector participation in AOFM supported RMBS.”
Today the AOFM announced that it has issued a letter of support in respect to a proposed RMBS issue arranged by Suncorp-Metway Limited.
“It is anticipated that this structure will allow the AOFM to invest in the issue at tighter levels in a way that complements a high proportion of private sector participation,” an AOFM statement said.
The AOFM has invested $8.7 billion in 27 RMBS transactions, sponsored by 14 different issuers since its inception. A further $7.3 billion is available to be invested under the existing RMBS investments program, of which AOFM has allocated $3.14 billion to future issues.
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