Resimac prices $1bn RMBS transaction

Resimac Group Ltd (Resimac) has priced its Premier Series 2021-2 prime residential mortgage-backed securities (RMBS) transaction.

The issuance is the latest in a string of transactions, which are generally used by the lending group to pay down warehouse facilities, creating capacity to underwrite new mortgages.

Over the course of the last financial year (FY21), the non-bank lending group issued $5.8 billion of Australian and New Zealand Prime and Specialist RMBS ($5.5 billion of which was Australian dollar), with pricing decreasing materially in the year. 

The RMBS senior margin on Australian prime RMBS was 70 basis points (bps) while specialist was at 80 bps in the second half of the year.

Its group net interest margin (NIM) increased 17 basis points to 207 bps in FY21, with the second half showing a particularly strong margin of 211 bps.

Overall, the group said it expects its NIM and funding costs will continue to decrease in FY22 as blended costs of funds benefit from older vintage RMBS rolling off, replaced by new issuance at lower margins.

Speaking to Mortgage Business, Resimac Group’s chief executive, Scott McWilliam, commented: “We priced the [recent] $1 billion prime RMBS trade at the lowest margins that we’ve priced since pre the GFC. [A]nd the three-year rate is the lowest prime margin that any non-bank has priced since the GFC. So that’s just an example of why cost of funds have improved, obviously helped by the fact that it is obviously a low and stable cash rate and a low and stable Bank Bill Swap Rate.”

Mr McWilliam said the group would “absolutely” continue to look to RMBS for more transactions in future, saying: “We are continuing to issue more into the market year on year, which is why our global program is so important. 

“We have a European shelf, we have a US shelf, we have a New Zealand shelf, we have an Aussie shelf, we actually have a Japanese/Asia PAC shelf. So, we will be issuing more into the market as we grow Assets Under Management, we grow our settlements. Which is why it’s important that we continue to grow relationships with overseas investors, who have contributed heavily to the last few issuances of our RMBS program,” Mr McWilliam said.

The ASX-listed group recently released its financial results for the year ended 30 June 2021 (FY21), showing record profits and settlements across its residential mortgages and asset finance products in Australia and New Zealand.

It revealed a normalised net profit after tax (NPAT) of $104 million, up 87 per cent on the prior year, and statutory NPAT of $107.6 million (up 92 per cent on the prior year).

Home loan settlements were up 3 per cent to $4.8 billion in the year (rising by $2.1 billion in the first half and $2.7 billion in the second), with the majority ($3.3 billion) being for prime lending. 

Prime settlements increased by 35 per cent in the second half of the year, which the lender said would provide strong momentum into the new financial year.

Australian brokers continue to write approximately 80 per cent of the group’s new loans, totalling $3.7 billion in FY21.

[Related: Non-banks announce RMBS, funding deals]