Citigroup, RAMS eye A$ mortgage-backed debt: sources

SYDNEY (Reuters) - Citigroup (C.N: Quote, Profile, Research, Stock Buzz) and RAMS Home Loans Group Ltd (RHG.AX: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) after failing to refinance over A$6 billion of debt when credit markets suddenly dried up and cut off its main funding source.