Who does this affect?

Issuers, arrangers and warehouse financiers of Australian mortgage backed securities

What do you need to do?

Determine whether to lodge a proposal to AOFM by 24 October 2008

Author
Ian Edmonds-Wilson  
Partner
Ian Edmonds-Wilson  
Partner
T +61 2 9296 2520
Berkeley Cox  
Partner in Charge (Brisbane Centre)
T +61 7 3244 8149

Sydney
Ian Edmonds-Wilson  
Determine whether to lodge a proposal to AOFM by 24 October 2008

Melbourne
Ian Paterson  
Determine whether to lodge a proposal to AOFM by 24 October 2008

Brisbane
Berkeley Cox  
Determine whether to lodge a proposal to AOFM by 24 October 2008

14 October 2008

RFP invited for AOFM mortgage backed securities proposal - 14 October 2008

The Australian Office of Financial Management (AOFM) announced yesterday that it was inviting the submission of a first round of proposals from arrangers of RMBS issues.

Click here to see the Government’s media release.

Key points to note include:

  • The closing date for lodging the first round of proposals is 24 October 2008
  • Proposals should be lodged only for issues that are expected to be priced and placed prior to the end of 2008
  • Proposals must be lodged by arrangers that are members of the AOFM Investment Facility dealing panel (current panel members are listed at Appendix 1 of the Request for Proposal attached to the media release)
  • Proposals may be lodged by arrangers on behalf of both ADI and non ADI issuers that have previously securitised residential mortgages in Australia and intend to remain active in funding new mortgages through securitisation
  • Arrangers may be part of more than one mandate
  • A proposal must meet certain prescribed minimum requirements. For example, the mortgage pool must satisfy the following:

 
  • loans must be mortgage insurable
  • lo-doc loans should not exceed 10% of the initial pool
  • maximum loan size of $750,000
  • maximum LVR of 95%, and
  • weighted average LVR of not greater than 70%
  • AOFM will contribute between $200 million and $500 million as a “cornerstone investor”
  • Proposals will be evaluated in terms of the contribution they will make to maintaining competition in housing lending
  • Pricing is to be determined by the parties to the issue at the time the deal is closed
  • Up to four mandates may be awarded to transaction sponsors as part of this first selection round
  • Selection criteria and information to be provided with the submission is set out in the media release (including items such as undertakings that the parties connected with the proposed issue are prepared to give in relation to use of the funds raised from the issue)

Please call a member of our team if you wish to discuss the implications for your business of submitting a proposal to AOFM.