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Positive outlook for RMBS: Moody

by Staff Reporter8 minute read
The Adviser

Australia’s RMBS market is not in danger of being downgraded, a report from the credit ratings agency Moody’s has found.

According to Moody’s the RMBS market is valued at more than $100 billion, almost all of which is comprised of prime deals.

“Despite a long term trend of increased delinquencies, ratings are anticipated to remain stable in the absence of mortgage insurer downgrades, Moody's vice president and senior analyst Arthur Karabatsos said.

According to Mr Karabatsos, the greatest risk to the RMBS market would come from the collapse of a non-bank lender.

“Since the credit crisis, non-bank lenders have been facing difficulties accessing new funds via the term market which in itself brings into question the long term sustainability of some of these entities given high dependency on RMBS,” Mr Karabatsos said.

In September last year, the federal government stepped in with a support package for the RMBS market, but this is all but spent, prompting concerns the pool will soon dry out.

Suncorp and Greater Building Society were mandated last week as the next recipients for funding, leaving just one more selection round before draining the $8 billion pool.

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