Citigroup, RAMS eye A$ mortgage-backed debt: sources
SYDNEY (Reuters) - Citigroup (C.N) and RAMS Home Loans Group Ltd (RHG.AX) are in discussions with investors about selling residential mortgage-backed securities (RMBS), sources said on Monday, in what would be the first such issues this year.
The RMBS market has been hit worldwide by the U.S. subprime mortgage crisis, which has sent borrowing costs sharply higher. Issuance of RMBS in Australia has completely dried up in 2008, from A$57 billion in 2007.
Citigroup's planned RMBS issue would be documented under the bank's Securitised Australian Mortgage (SAM) Trust programme and would be lead managed by Citigroup.
Details on size and structure were not immediately available, while Citigroup declined to comment.
RAMS, Australia's first high profile victim of the subprime crisis, is eyeing an A$300 million equivalent ($280 million) RMBS issue with Italy's top bank UniCredit (CRDI.MI) lead managing the offer, an investor said.
Preliminary pricing of the 2.5-year triple A rated notes suggested a margin above 150 basis points over BBSW, the same investor added.
The offer will include a euro-denominated tranche, he said.
UniCredit was not available to comment.
RAMS was last year forced to sell part of its business to Westpac Banking Corp (WBC.AX) after failing to refinance over A$6 billion of debt when credit markets suddenly dried up and cut off its main funding source.
Earlier in the year, RAMS privately securitised A$750 million of homeloans but market sources said the securities were not sold to investors, instead they were placed into a warehouse, a type of credit line, provided by UniCredit.
The pipeline for the RMBS market is looking a little brighter amid signs of stabilization in European and U.S. credit markets.
A unit of U.S.-based finance company GMAC has also been discussing with investors a A$303 million non-conforming RMBS debut with Westpac Institutional Bank. See ID:nSYD118261.
Although preliminary pricing is a moving target, according to investors, latest indications suggest a margin at around 250 basis points above BBSW, or higher.
There is no set timing and the offer is in bookbuilding, one of the investors added. Westpac declined to comment.
($1=A$1.07)
(Reporting by Cecile Lefort; Editing by James Thornhill)
