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AMP upsizes RMBS issue

by Staff Reporter8 minute read
The Adviser

AMP has almost doubled its residential mortgage backed securities (RMBS) issue to $1 billion.

The bank announced last week that it had planned to sell $543.5 million of bonds, however, on Friday AMP decided to upsize its RMBS issue, pricing the main class issue at $920 million – 130 basis points above the bank bill swap rate.

The sale follows Westpac's $2 billion RMBS issue in December, which was the first such sale by one of Australia's top four lenders since the financial crisis began.

''The fact that the deal was upsized is a sign that the market is viable on its own feet rather than dependent on government to prop it up,'' Tyndall Investment Management head of credit John Sorrell told the Sydney Morning Herald.

''Pricing is wider than it was before the crisis, but at least the deals can now be done.''

Australian lenders stopped selling RMBS when the collapse of US subprime mortgages pushed margins on the bonds as high as 550 basis points, from 15 basis points.

According to Mr Sorrell, AMP’s decision to upsize its RMBS issue suggests the economy is moving back towards a level of normality.

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