The market for 'green' residential mortgage-backed securities in Australia will likely broaden following the issuance of the first such deal by National Australia Bank last week. Green RMBS are securities backed by mortgages on properties that meet low energy emission standards. The NAB deal attracted a total of A$2 billion from investors, according to a media release from the bank. Both the senior ranking class A-1A (non-green) and A-1G (green) notes were priced at 85 basis points over the one-month bank bill swap rate, and were rated Aaa and AAA by Moody's Investors Service and Fitch Ratings, respectively. The green tranche comprised $300 million of NAB-originated mortgages on Australian residential property that meet the Climate Bonds Standard Criteria for Australian low carbon residential buildings. "It attracted socially responsible funds and more mainstream investors from Australia and internationally, and was close to two times oversubscribed," NAB stated."Over time, a broader market for green RMBS will lead to tighter pricing for green deals compared to standard RMBS and result in higher excess spread, a credit positive," Moody's Investors Service analysts wrote in a note to clients this week in the aftermath of the NAB deal. "A wider market will also mean better secondary market liquidity for outstanding green RMBS notes."This becomes attractive to investors as, all other factors being equal, mortgages for "green" residential properties will be repaid at the same rate as other NAB-originated home loans, but as investors will be paid a lower return, excess cash flow will be building up as a buffer against any future non-performance.Moody's further surmised that future green Australian RMBS notes will likely follow the lead set by the NAB deal and seek international green certifications. "Such international certifications widen the potential base of investors for green RMBS notes from Australia, which is a positive in respect of pricing and secondary market liquidity," Moody's stated.Banking Day asked NAB whether any savings in funding costs would be shared with borrowers who bought "low carbon" homes that met and tried out for other environmental standards but had not received a response by today's publication deadline.