The start of 2013 has seen several issuers tap RMBS markets in significant volume, achieving notably tight pricing. Since the start of the calendar year, over $5bn of new RMBS have been issued, compared to only $150m for the entire first quarter of 2012.
The year began with Bendigo and Adelaide Bank successfully marketing an $850m transaction, their first since November 2011. The AAA rated senior tranche priced at 95 basis points (bps) over BBSW, with a weighted average life of 3.6 years.
This compares to the National RMBS Trust issued by the NAB in December last year and the Series 2012-1E Reds Trust issued by the Bank of Queensland in November, where the senior tranches priced at BBSW +110 and +135 respectively.
Westpac followed Bendigo and Adelaide one week later with the Series 2013-1 WST Trust. Upsizing the transaction to $2.1bn, this was Westpac’s largest RMBS transaction since June 2011. The $1.9bn senior tranche priced at BBSW + 85 bps – even tighter than the Bendigo transaction the week before.
The CBA rounded out the month with a $2.3bn transaction (upsized from $750m) which priced similarly tightly. The $1bn senior A1 tranche priced at BBSW + 80 bps, with a further $1bn of A2 notes with a longer weighted average life pricing at BBSW + 88 bps.
Across all three of these deals, similarly tighter pricing was observed in subordinated tranches as well.
Collectively, these transactions exhibit a significant tightening of RMBS spreads since as recently as December last year. If this sentiment continues, we can expect to see substantial further issuance in the space as the year continues.