First success for govn't RMBS initiative

The government's $8bn RMBS initiative aimed at boosting market competition has had its first success with non-bank lender, FirstMac selling $600m of RMBS.

Of the total, $500m was bought by The Australian Office of Financial Management (AOFM) with the remaining $100m taken up by private investors.

ANZ, Macquarie Bank and HSBC Bank acted as joint lead managers, according to the Australian Financial Review.

The top tranche of the issue was priced at 1.25 percentage points over the bank bill swap rate, placing it at eight times the level of pre-credit crunch deals but in line with recent transactions.

FirstMac chief financial officer James Austin told The Age that the government's purchase would help boost competition in the non-banking sector.

"The main benefit will be that it will allow more funding to be provided for mortgages," he said.

Treasurer Wayne Swan, gave the AOFM authority to buy $8bn in RMBS to shore up funding for the flailing non-bank sector. 

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