The Australian government will extend the Australian Office of Financial Management (AOFM)s RMBS purchase program. It could now reach AUD 8 billion ($7.25 billion) -- twice the original program - as the government wants to continue to back up a number of second tier mortgage lenders.
While the existing program directly purchases senior tranches from eligible structures, the extended program could provide investors with a liquidity backstop facility for the new eligible transactions.
“The Government’s temporary extension of the program will help smaller lenders to continue to issue RMBS in the short term as the securitization market recovers from the impacts of the global financial crisis,” said Wayne Swan, Treasurer of the Commonwealth of Australia, in a statement.
