Citigroup prices RMBS issue

by BN20 May 2008

Citibank has priced the first public residential mortgage-backed securities (RMBS) issue in Australia since the market shut in December.

The bank was forced to offer 1.45 percentage points above the one-month bank bill swap rate to sell $500m in RMBS. However, according to a report carried by The Wall Street Journal, Citigroup was still able to make a profit on the deal.

Australia's last RMBS transaction, which was carried out by Bluestone, saw the non-bank lender offering investors 1.08% more than the swap rate.

Citibank Australia's consumer chief executive Roy Gori said the RBA's efforts to improve liquidity had helped smooth the way for the transaction.

"The actions taken by the Reserve Bank of Australia to improve liquidity helped this trade, but it was good to see the usual investors keen to buy," Gori said.

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