NZ Mkt For Non-Conforming Mortgage Bonds Comes Of Age
Thursday 24 June 2004
The securitization of prime mortgages into bonds is well established in New Zealand, and now the sector for non-conforming mortgages is starting to see similar levels of growth, market participants say.
By The LandlordNon-conforming mortgages are those that don't have the high level of documentation and income history which make prime mortgages so attractive for investors.
The market for non-conforming mortgage-backed bonds has tightened in the past eight months with a contraction in the spread at which the AAA tranche of floating-rate non-conforming mortgage-backed securities trades over the three-month bank bill rate.
Last week, Sapphire Securities, which securitizes non-conforming mortgages originated by Bluestone New Zealand, became the first issuer of bonds backed by non-conforming mortgages originated in New Zealand.
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