Pricing for securitisation struggling to fall
By
Luke Cornish
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25/03/2010 2:00:00 AM
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BankWest is set to price its $620m RMBS issue at 1.3% over the bank bill swap rate (basically prime) in what would be the equal lowest for a top-rated tranche of residential mortgage-backed securities since the GFC hit.
BankWest had initially aimed at selling its notes at 1.25% over prime but investors were reluctant to take up the offer at that level, given the fact that similar 3-year RMBS issues have been priced as high as 1.35% over prime.
The price of securitisation has a direct impact on the fortunes of brokers as non-bank lenders need the pricing to drop significantly if they are going to be able to provide any real competition to the major lenders.
Prior to the GFC, an RMBS issue could fetch as little as 0.15% over prime. While nobody expects those levels to return (at least for a long while), a fall below 100 basis points would provide the opportunity for non-banks to raise funds and lower their prices.
Brokers have been crying out for a strong non-bank lender to emerge – much as Aussie did in the 90s – to take on the might of the big banks and provide their clients with choice. Due to their lack of a distribution network, non-banks are also traditionally far more broker friendly than banks who also sell loans through their own branches.
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