31 March 2010
Sale of Certain RMBS Investments
During March the AOFM sold a small quantity of residential mortgage-backed securities ("RMBS") to rebalance its portfolio. The securities sold were Class AB notes with a total face value of $73.79 million across four lines, with coupons ranging from 1.70% to 1.95% over 1month BBSW. The sales were at par.
This adjustment to the AOFM’s holdings of RMBS was undertaken as part of its management of its portfolio and to provide more scope for future purchases of similar tranches. The AOFM does not have any credit concerns relating to these securities, its RMBS portfolio or to Australian RMBS more broadly.
The sale was in accordance with the Treasurer’s Directions of October 2008 and November 2009, which allow the AOFM to adjust its holdings of RMBS.
The sale was not a step to reduce the AOFM’s holdings of RMBS, which in current market conditions will continue to grow. The AOFM will continue to monitor primary and secondary market activity in formulating its advice to Treasury and the Government on the ongoing need for support.
The AOFM is reporting the details of this transaction in the interests of secondary market transparency. It does not intend to make additional sales in current circumstances.
The AOFM reports on its participation in primary RMBS transactions as they occur. AOFM month-end investment holdings, including RMBS investments, are also reported.