Resimac reflects on $1 billion RMBS issuance

Strong demand from investors welcomed

Resimac reflects on $1 billion RMBS issuance

Having recently completed a $1 billion residential mortgage-backed securities transaction, Resimac said it received strong interest from investors.

The transaction, its first for 2023, was upsized from $500m to $1bn, which the non-bank lender said showed healthy demand for Australian RMBS bonds.

Resimac, which specialises in flexible lending solutions for self-employed and credit impaired borrowers, including contractors, priced a $1bn non-conforming residential mortgage-backed securities (RMBS) transaction in April, as part of its regular funding program.

Resimac chief treasury officer Andrew Marsden told MPA that RMBS were Resimac’s primary long-term funding source, and that the April issuance was part of its regular funding program.

He confirmed that Resimac had issued more than $43bn across 66 domestic and offshore RMBS transactions.

Responding to questions about the success of the RMBS and what funds would be used for, Marsden said that the transaction allowed Resimac to continue to assist its customers.

“The RMBS issuance creates capacity in our funding program to continue to offer alt-doc and specialist products, designed to assist self-employed and credit impaired borrowers,” Marsden said.

Borrowers could draw confidence from the deal, as it underlined Resimac’s “commitment and capability” to support products designed to help self-employed and credit-impaired borrowers needing flexible lending solutions.

“It demonstrates that our business is well funded and supported to allow us to continue to provide products at competitive rates,” Marsden said.

Reflecting on the upsizing of the deal, he said that Resimac had seen “healthy demand” for Australian RMBS bonds, particularly from offshore investors.

“Compared to offshore markets, investors are broadly very comfortable with the Australian macro situation and the housing market,” Marsden said. “Our approach has always been to prioritise relationships with our investors, rather than be opportunistic, and this approach has enabled us to successfully raise funding through all market cycles.”

Resimac’s RMBS issuance was conducted in mid-April, in the aftermath of the Silicon Valley Bank collapse.

“Despite a challenging macro backdrop, investors were generally of the view that contagion risk in the broader financial system was remote, and they retained a reasonably positive outlook on the Australian housing market,” Marsden said.

The RMBS transaction, finalised on April 20, enabled the business to continue providing brokers with flexible products to meet the needs of self-employed and credit-impaired borrowers.

Through these products, brokers have the opportunity to diversify their business and respond to market conditions, he said.

“Resimac is continuing to pursue this type of customer using our proven products and strong relationships with brokers,” Marsden said.

NAB and Citigroup Global Markets Australia Pty Ltd (Citigroup Global Markets) acted as co-arrangers for the RBMS issuance, while Citigroup Global Markets, NAB, Barrenjoey Markets Pty Limited and CBA acted as joint lead managers.

Effective March 8, Resimac increased commission rates applying to prime alt doc and all specialist products.  Its half-year results ending December 31 showed a net profit after tax of $38.9m and home loan settlements of $2.4bn.

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