Firstmac completes $500m RMBS deal

Non-bank lender Firstmac has successfully placed and priced a residential mortgage-backed securities (RMBS) deal worth $500 million despite citing difficult market conditions of late.

The Firstmac Mortgage Funding Trust Series 2-2015 was arranged by NABSecurities Australia and jointly led by ANZ and Westpac. A total of 15 investors participated in the transaction, including 13 real-money accounts.

Firstmac chief financial officer James Austin said the group was pleased to have achieved the result even though market conditions were less favourable than its last RMBS issuance – a post-GFC record-breaking $1 billion deal.

“It has been a difficult market of late, so we are happy with the outcome of the transaction,” he said.

The deal priced at +117, which was 0.19 percent wider than the previous transaction.

“That result reflects the general market widening that has been observed in recent months, when funding costs have increased across the industry by roughly 20 basis points,” Mr Austin said.

It has been more than a decade since Firstmac commenced RMBS issuances, and Mr Austin said investor interest hadn’t waned over time.

“An offering with a strong track record is generally well received by the investor market, and Firstmac bonds are certainly consistent with that trend,” he said.

According to Mr Austin, it was Firstmac’s ability to harness innovation in the home loan sector that encouraged investors to pursue its RMBS bonds.

“Steadily, Firstmac has captured market share from conventional lenders by using online technology to create opportunity and open new markets,” he said.

“The home loan industry in Australia is dynamic and fiercely competitive, and Firstmac has not stood still in the face of rapid change.”

The non-bank lender has issued more than $14 billion in RMBS since 2003.

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