UK investors dump Aussie mortgage bonds in cash scramble

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The UK pension crisis spilt over into Australian securitisation markets as five sellers auctioned off bonds issued by the likes of Athena, Pepper, Resimac and Zip Co

set off a chain of events that triggered a scramble to raise cash as pension funds faced margin calls.as it stepped in as a buyer of last resort in the market.

Non-bank lender Firstmac began marketing a $1.7 billion mortgage-backed bond sale during the week as did Pepper which sought interest for a $500 million sale of bonds backed by non-conforming mortgages.$200 million to $300 million on WednesdayBut the decrease in volume and significant increase in borrowing rates paid relative to its previous offering revealed how hostile credit markets had made financing scarcer and costlier for non-banks that rely on securitisation markets.

Meanwhile, $4.2 billion of asset-backed bonds have been issued, about 30 per cent down from the $5.7 billion of sales at this stage last year, according to National Australia Bank data. The majority of the mortgage-backed bonds were sold by non-bank lenders that rely on securitisation as a primary source of funding.

That prompted the then Labor government to instruct the government’s debt agency - the Australian Office of Financial Management to invest an initial $8 billion in new sales from bonds issued by non-bank lenders.

Source: Financial Digest (financialdigest.net)

 

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theyareaverage Atleast 2 of those 5 companies is going into administration imo. Zipco pretty much a lock, and the others all at severe risk of rising defaults

Feels very much like 2008 again !

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