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First RMBS to be placed without AOFM backing

by Staff Reporter7 minute read
The Adviser

Bendigo and Adelaide Bank could become the first regional bank to sell residential mortgage backed securities without government funding since the AOFM support was announced in September 2008.

According to a report in The Australian Financial Review, the bank is in discussions with fixed income investors to launch a deal worth more than $500 million.

Yesterday, ME Bank priced its third issue without government funding.

The main tranche was placed at a margin of 140 basis points, 10 basis points less than banks with a BBB rating must pay under the government’s wholesale funding guarantee.

This means for lenders outside the big four, the cost of selling RMBS has now dropped below that of raising funds under the government’s guarantee, making investing in the market a more lucrative option.

A spokesperson for Bendigo and Adelaide Bank said the bank was considering different markets and was currently paying close attention to the securitisation market.

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