Westpac seeks further mortgage-backed funding

Westpac launched a transaction yesterday, seeking to sell around A$1 billion of notes, backed by a pool of the bank's own prime mortgages, to institutional investors. The bank has become a keen seller of paper backed by its own mortgages (either through covered bonds or, in this instance, RMBS notes) with good reason.

In May this year, Westpac launched its first RMBS deal for 2014. This transaction was not only upsized more than three-fold from the $750 million sought at launch to $2.5 billion at close, the top-rated notes were priced at 78 basis points above the bank bill swap rate, slightly inside that achieved by CBA in February for notes of a similar quality.

The issue currently being marketed by Westpac, to be known as the WST 2014-2 Trust, is likewise backed by a pool of fully verified, Westpac branded prime Australian residential home loans. These mortgages have a weighted average loan to value ratio of 63 per cent and weighted average seasoning of 33.6 months (that is, the borrowers have, on average, each been paying off their home loans for almost three years).

The Class A notes are expected to be rated AAA(sf) by both Standard & Poors and Fitch, respectively, with pricing expected "on or around Thursday 4 December."

The sole lead manager is Westpac Institutional Bank.