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AFG prices largest RMBS transaction to date

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Malavika Santhebennur 5 minute read

The aggregation group has successfully priced its largest RMBS transaction to date, totalling $700 million.

Australian Finance Group (AFG) has priced a $700 million AFG 2020-1 trust residential mortgage-backed securities (RMBS) issue.

AFG CEO David Bailey said support from both domestic and international investors enabled the deal to “upsize” from $350 million to $700 million.

He welcomed the successful transaction at a time of dislocation in the market caused by the coronavirus pandemic.

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“The strong support we received for the issue is evidence of the depth of the securitised business,” Mr Bailey said.

“Support that has enabled the company to issue $3.575 billion of paper into the market over the past seven years.”

The RMBS consists of:

  • A class A tranche totalling $612.5 million;
  • A class AB tranche totalling $49 million;
  • A class B tranche totalling $20.4 million;
  • A class C tranche totalling $7.6 million;
  • A class D tranche totalling $4.2 million;
  • A class E tranche totalling $2.8 million; and
  • A class F tranche totalling $3.5 million.

Commenting further on the RMBS transaction, Mr Bailey said: “As both an originator and a distributor of mortgages, our experience informs our lending practices.

“Disciplined lending criteria and active management of the portfolio has meant we are in a fortunate position to take our paper to market.

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“Our portfolio, 100 per cent broker-introduced, has a track record of outstanding performance, and we are very pleased to see both new and return investor participation.”

Mr Bailey concluded by thanking AFG’s investors for their support.

The RMBS transaction, which is AFG’s largest to date, settles on 30 July.

This follows news of AFG signing a strategic partnership with 86 400 to give its brokers access to the neobank’s digital mortgage offering from next month.

The listed group is currently working through the courts on a deal that would see it merge with fellow aggregation group Connective. Recently, the Australian Competition and Consumer Commission announced that it would not oppose the proposed $120-million merger. A combined AFG-Connective entity would cover around 40 per cent of the broker channel.

A final decision on the merger is not currently anticipated until after the second half of FY20. 

[Related: AFG prices $500m RMBS]

AFG prices largest RMBS transaction to date
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

 

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