Australia's first new residential mortgage-backed security (RMBS) of 2010 gained strong investor interest, pricing today at A$1bn (US$903.06m), nearly twice the expected A$543.5m. The RMBS is the first such deal placed with private investors in 2010. And notably, the program did so without a large government backstop. Progress 2010-1 Trust RMBS consists of residential mortgages originated by Australian lender AMP Bank. It marks the first RMBS issued under the Australian government’s Australian Office of Financial Management (AOFM), the agency that manages Australian government debt and cash balances and invests in financial assets. AOFM did not exercise its support for the senior Class A notes, and the transaction still over-subscribed. Eighteen investors participated, including several participants re-entering the market. European investors nabbed 40% of the notes. “The Progress transaction result was very pleasing," said AMP Bank limited treasurer Guy Morgan in a statement today (download here). "The transaction was upsized to 18 investors at a pricing margin of BBSW [the benchmark] +130 bps - a tighter margin than price guidance of BBSW +135 bps area. Furthermore it was achieved without the need for significant government support.” The A$920m of Class A notes, rated triple-A with 3-year maturity dates, priced at +130 bps over the benchmark. The A$56m of Class AB notes, also rated triple-A but with 5.2-year maturity dates, priced at +180 bps over the benchmark. The AOFM bought up up A$36m of the Class AB notes. The A$24m of Class B notes, rated double-A minus with 5.2-year maturity dates, priced at undisclosed terms. Deutsche Bank and Westpac were joint lead managers on the transaction, which indicates new RMBS may be seeing more success abroad than in the US. Such a transaction is widely anticipated in the US, though no new private label RMBS deals have come to market. Furthermore, the bookrunners on the deal say the RMBS will help invigorate the Australian secondary market: “We are seeing a significant move toward normality in RMBS primary issuance with more investors and confidence building with every transaction that comes to market," said John Claudianos, head of new issue at Deutsche Bank. "The Progress transaction is a significant step in the development of the RMBS market for 2010.” The Australian RMBS notes follow recent European issuance that indicates new securitizations are helping provide liquidity in the global financial market. Write to Diana Golobay.