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Date Published : Tuesday, May 20, 2008
The first Australian victim of the global sup-prime mortgage crisis has announced it will extend the maturity of some residential mortgage-backed securities (RMBS).
Home loans group RHG Group Limited has decided its lack of new funding means it will be less costly to absorb the penalties incurred from RMBS extension as opposed to issuing new securities, according to the Spectator.
This move effectively forces the hand of investors, who if they reject the proposed extensions, will be faced with notes which will pay out even less, placing them, as one anonymous investor tells the newspaper, "between a rock and a hard place".
RHG Group Limited has reportedly proposed a rate of 85 basis points (bp) over 90-day BBSW until April 2010, for AU$187 million (£91 million) of A3 notes and 100 bp on $45 million of class B notes.
Established following the deregulation of the Australian finance industry in the 1980s, RHG Group Limited currently counts 54 franchises and over 100 offices among its business empire.
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