RMBS pricing best in a decade: Resimac

John Kavanagh

Resimac CEO Scott McWilliam

Resimac group treasurer Andrew Marsden says “deal economics” in the residential mortgage-backed securities market have improved considerably since last year, with the lender paying a weighted average margin on its latest transaction that is 30 basis points lower than its previous deal in December.

Resimac has completed a A$1.5 billion issue of prime RMBS, Resimac Premier Series 2021-1, which has a weighted average margin of 102 bps.

The weighted average margin on the $1 billion December deal was 132 bps and back in July, when Resimac issued $500 million of RMBS, it paid an average margin of 157 bps.

The latest issue is a dual currency transaction. The Class A1 notes, worth US$360 million, have a weighted average life of 1.8 years and were priced at a margin of 70 bps over US Libor.

The $720 million of A2 notes, which have a weighted average life of 2.7 years, were priced at 80 bps over the one-month bank bill swap rate.

The $180 million of A2 notes, which have a weighted average life of 4.9 years, were priced at a margin of 105 bps.

The $79.5 million of AB notes, which have a weighted average life of 4.4 years, were priced at a margin of 125 bps.

Marsden said pricing on the US dollar notes and the A1 notes is the tightest achieved by a non-bank issuer since the financial crisis.

“In conjunction with lower term RMBS margins, our short-term funding costs are reducing as wholesale lending markets are reprising. With heightened home loan activity expected over the remainder of 2021, our funding initiatives should provide a strong platform to take advantage of opportunities in the mortgage market,” Marsden said.