Suncorp Bank yesterday finalised terms for the sale of A$1 billion in mortgage-backed securities, a deal noteworthy for the limited participation of the Australian Office of Financial Management.Yesterday, the bank said it had sold $930 million in bonds (with an average life of 3.86 years) at a spread of 155 basis points over the one month swap rate. It sold $52 million in a subordinated tranche (with an average life of 5.85 years) at 300 bps over swap. Pricing was not disclosed on a further $18 million of seller notes.The AOFM had agreed to buy an unspecified level of notes in the senior tranche but was not required to do so.Simon Lewis, head of funding at Suncorp Bank, said 22 investors bought securities in the senior tranche. He said 15 were fund managers and two were from offshore.Lewis said there were seven investors in the subordinated (or "AB") tranche. The AOFM bought one third of these securities.The AOFM had also planned to be an investor in $800 million in RMBS sold last week by AMP Bank, but in the end was not asked to invest in any of these securities.Lewis said of this trend: "It's quite a positive development. Investors have realised the value in RMBS relative to other well-rated instruments.He said the own-name unsecured paper of major banks, and also covered bonds, of banks had rallied hard over the last six weeks, while RMBS had not done so."What we arrived at this week was a value point."Rob Nicholls, chief executive of AOFM, said the AMP and Suncorp transactions "demonstrate there is an appetite out there for RMBS. We were supportive of the [Suncorp] deal and pleased to see the deal go through."Rob Camilleri, managing partner at Realm Investment House, said the AOFM was still likely to be needed as an investor in subordinated tranches."If you look at the recent announcement of [guideline] APS120, APRA made it clear that anything below the bottom 10 per cent of a deal is very capital-heavy for banks."