AFG Securities has returned to the capital markets, extending a funding program backed by broad investor interest.
Major aggregator Australian Finance Group’s funding subsidiary, AFG Securities, has priced a $1.2 billion prime residential mortgage-backed securities (RMBS) transaction, matching the size of its previous record issue and taking its cumulative term RMBS issuance to $13.1 billion.
The transaction, announced on Friday (18 September), is AFG Securities’ 21st term RMBS deal and is expected to settle on 29 September.
AFG noted that the issue drew strong demand from domestic and international investors and said this signalled continued engagement with its securitisation program.
AFG CEO David Bailey said the investor response underlined the reach of the group’s funding platform across local and offshore markets.
“We are very pleased with the response to this transaction and the breadth of engagement from investors in Australia and international markets,” he said.
The $1.2 billion transaction equals the size of AFG Securities’ February 2026 RMBS issue, which was its largest ever at that point.
That earlier deal attracted more than 30 Australian and offshore investors, including four new investors.
The latest transaction builds on AFG’s shift towards funding mortgages through its own balance sheet.
AFG Securities uses warehouse facilities and term RMBS issuance to fund loans, enabling the group to earn net interest margin on its lending book rather than solely relying on the commission income associated with loan aggregation.
The aggregator said that more than half of AFG Securities’ outstanding funding was now sourced from long-term RMBS issuance.
Bailey said the latest issue would strengthen that funding base and support AFG Securities’ lending capability.
“This transaction further supports the strength and diversity of our funding program and provides an important foundation for AFG Securities to continue delivering competitive home loan solutions for AFG brokers and their customers,” he said.
RMBS market remains active
RMBS issuance allows lenders without large retail deposit bases to package mortgage pools into securities sold to institutional investors.
The model has become an important funding channel for non-bank lenders and lender-owned funding vehicles, particularly as competition for home-loan customers continues across bank and non-bank markets.
AFG’s successful return to the market also comes amid a significant year for Australian RMBS supply.
In February, MA Money priced a $1.25 billion RMBS transaction that included the lender’s first foreign-currency tranche.
ColCap Financial Group followed with a $2.7 billion issue, the largest RMBS transaction by an Australian non-bank, after increasing the deal from an initial $1 billion guide.
Firstmac then priced a $2 billion RMBS transaction in June, upsizing the transaction from an initial $750 million target amid investor demand.
[Related: AFG co-founder to step down]
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