Non-bank turns funding tap on

Hope is building that the credit markets are starting to flow again after GMAC Financial Services sold $302 million of residential backed mortgage securities. The loan package was sold at a high price as the loans are low doc with value ratios of 80 per cent, but these loans have been completely shunned by markets for the past six months. The bonds were priced with a margin of more than 3 percentage points above the 90 day bank rate and have a cash buffer of $20 million to cover any defaults. Capital markets director at GMAC, Andrew Greenslade, said that the deal was a success regardless of the price. "It's a major step forward for us. It was about whether the market was open. The answer is yes."

Source: The Australian Financial Review