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- Residential mortgage lender Resimac Group (RMC) has closed its Premier Series 2021-1 prime RMBS dual-currency transaction
- The $1.5 billion deal was the company’s first RMBS transaction for the year and its largest since 2006
- The transaction has provided Resimac Group with net interest margin tailwinds well into the 2022 financial year
- The company expects to continue seeing such opportunities for success as home loan activity increases
- Resimac Group is up 10.8 per cent and trading at $2.36 per share
Residential mortgage lender Resimac Group (RMC) has closed its Premier Series 2021-1 prime RMBS dual-currency transaction.
Residential mortgage-backed securities (RMBS) are a type of bond that is secured against a large pool of residential mortgages. RMBS notes usually group together hundreds or thousands of home loans into a pool, which is then broken down into small classes.
RMBS transactions are often issued in two or more separate tranches, which differ based on factors like interest payments. A typical RMBS transaction will include an option that allows the issuer to buy back the RMBS at face value, once a certain percentage of the underlying mortgage pool’s original size is repaid.
Resimac’s Premier Series 2021-1 prime RMBS dual-currency transaction was the company’s first RMBS transaction for 2021. At $1.5 billion, the March 2021 deal was also the company’s largest since 2006.
The transaction also represents 12 per cent of Resimac’s total funding of home loan assets under management.
The notes from the transaction’s Australian dollar senior tranche were priced at over 80 basis points (BPS), while the U.S. dollar notes were priced at over 70 BPS. These are the tightest levels achieved by a non-bank since the Global Financial Crisis, providing net interest margin tailwinds into the 2022 financial year.
Resimac Group’s Treasurer, Andrew Marsden, commented that global investor appetite for the company’s RMBS continues to be pleasingly strong.
“Overall deal economics improved by 30bps from December’s Premier 2020-3 transaction and 55bps from COVID peak in June’s Premier 2020-2 trade,” he said.
“The deal was heavily over-subscribed and we expect issuance conditions to remain supportive to our growth objectives throughout 2021. We are looking forward to bringing further bond transactions to the market in 2021,” he added.
Andrew went on to say that Resimac’s short-term funding costs are reducing as wholesale lending markets are repricing. He predicted that with heightened home loan activity expected over the rest of 2021, the company’s funding initiatives should provide a strong platform to take advantage of Australian mortgage market opportunities.
Resimac Group is up 10.8 per cent, trading at $2.36 per share at 3:40 pm AEDT.
