14 July 2009
Purchase of Residential Mortgage-Backed Securities (RMBS) – Announcement of Further Mandates – Second Selection Round
In Operational Notice 13/2009 of 2 June 2009 the AOFM announced two mandates to arrange the issue of RMBS with the AOFM as a ‘cornerstone investor'. Issues of RMBS in connection with those mandates have now been priced with AOFM participation as follows:
- WB Trust 2009-1, issued by Wide Bay Australia Ltd - AOFM investment of $299.5 million; and
- Light Trust No. 2, issued by Australian Central Credit Union Limited - AOFM investment of $190 million.
To date the AOFM has invested $6.693 billion in prime RMBS, with $3.240 billion in RMBS issues sponsored by Authorised Deposit-taking Institutions (ADIs) and $3.453 billion in RMBS issues sponsored by non-ADIs.
The AOFM has selected two further proposals from the second selection round for the allocation of mandates for RMBS issues that are expected to be priced by the end of August 2009. The AOFM has advised the parties concerned of its interest to participate in the following proposed issues:
- Westpac Banking Corporation as arranger and lead manager of an issue for Greater Building Society Limited; and
- Suncorp-Metway Ltd as arranger of an issue on its own behalf.
Confirmation of the AOFM's investment in these proposed RMBS issues is subject to finalisation of acceptable documentation, confirmation that relevant conditions will be met and agreement on pricing.
On completion of the transactions mandated today, the AOFM expects to issue a Request for Proposals for a further selection round.
- Under the Treasurer's Directions of 3 and 16 October 2008, the maximum amount that the AOFM may invest in RMBS sponsored by ADIs is $4 billion; the AOFM will be close to this limit when the transactions mandated today are completed. The next selection round will therefore most likely be restricted to transactions sponsored by non-ADIs.