Challenger unit launches A$500 mln RMBS offer

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SYDNEY, March 31 (Reuters) - Australian non-bank housing
lender Challenger Mortgage plans to sell A$500 million ($339
million) of prime residential mortgage-backed securities
(RMBS), it said on Tuesday.

The Australian government will buy some of the offer as
part of its A$8 billion RMBS purchase plan announced late last
year to inject much-needed liquidity into the home loan market.

The government has already invested A$3.3 billion in seven
RMBS issues since the programme was introduced.

Australian non-bank lenders have suffered since the U.S
subprime mortgage crisis because they are reliant on the
now-moribund securitisation market to fund their operations.

The government said last week it would invest in three new
RMBS offers including Challenger.

The two other issues are Liberty Financial's A$600 million
of RMBS (see [ID:nnSYD490447] for more details) and Bank of
Queensland Ltd (BOQ.AX)'s upcoming offer expected to launch on
Wednesday, according to a fund manager. The issue size is
anticipated to be around A$500 million, the source said.

The new Challenger offer, called Challenger Millennium
Series 2009-1 Trust, is backed by prime mortgages, and jointly
led by Barclays Capital, Deutsche Bank and National Australia
Bank.

Pricing is expected by the end of April.

The issuer is a unit of Challenger Financial Group
(CGF.AX). The first tranche has a final maturity of April 20,
2010, while the other tranches mature on April 20, 2040.

The issue pool includes loans with an average loan-to-value
ratio of 69 percent and an average time since issue, or
seasoning, of 30 months, according to Standard & Poor's. The
pool comprises 8 percent of low-documentations loans.

Mortgage insurers are Genworth Financial Mortgage Insurance
Pty Ltd (47 percent) and QBE Lenders' Mortgage Insurance Ltd
(53 percent).

Details of the offer are as follows:

Class AMOUNT RATINGS AVER LIFE

(MLN) (S&P) (YEARS)

A1 A$39 A-1+ 0.19

A2 A$40 AAA 0.54

A3 A$160 AAA 1.53

A4 A$229 AAA 4.29

AB A$16 AA 4.39

B A$16 A 4.39

($1=1.473 Australian Dollar)
(Reporting by Cecile Lefort)