Suncorp Doubles Size Of New RMBS Issue Due To Investor Demand

Post by Sharat on May 28, 2010 · Under Australian Economy, Business News, Capital Markets, Company News, banking · Comment 

Banc-assurance group Suncorp-Metway is returning the residential mortgage backed securities market, in a further sign of growing confidence, pricing a $1 billion issue, after investor demand forced the company to double the size the original issue from $500 million.

Suncorp issued $630 million in Class A1 notes, which were priced at 100 basis points over swap. The company issued a further $300 million in Class A2 notes that were priced at 120 basis points over swap.

The Class A1 tranche was in line with initial guidance from Tuesday, while the Class A2 tranche was priced on the tight-end of guidance.

Investors failed to participate in the sale of the class A2 notes with the Australian Office of Financial Management purchasing that entire, longer-dated top tranche.

Earlier in the week, the AOFM revealed that it intended to buy specific RMBS deals at tighter spreads, as it seeks to help the recently stalled issuance of RMBS, allowing smaller lenders to be able to compete more equally on home loan origination.

Many analysts and investors have openly questioned the government policy of intervention, given the fact that the market has begun a recovery over the last ten months.

According to Suncorp, 14 investors took part in the deal, with the vast majority of its class 1 notes, bought by domestic fund managers.

The transaction was arranged by Suncorp, with Macquarie Bank and Deutsche Bank acting as joint lead managers and book runners.

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