The market for Australian mortgage-backed paper continues to diversify and deepen, as the larger securitizers which normally finance themselves offshore return to the domestic market, while second-tier firms make their cross-border debuts.

The latter trend is particularly striking, given the cost of the cross-currency swap, which has become prohibitive for many Australian borrowers as a result of US$3.5 billion of vanilla offshore bond issuance by major Australian banks during the first half of the year, and subsequent swapping back to the domestic currency.

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