IFR: AIG Sells First RMBS of 2019

June 15, 2019
Original article by David Bell

International Finance Review reported that June marked AIG’s first deal of 2019, reflecting this year’s “sluggish” private-label prime jumbo RMBS issuance; only US6.5bn of bonds have been sold year to date, according to Bank of America Merrill Lynch.

According to Senior Portfolio Manager Jake Remley of Income Research + Management, pricing on those deals is getting tighter relative to jumbo bonds as investors get more comfortable with a corner of the market that burned many of them during the crisis.

“Initially you might have got 25bp-30bp additional spread compensation for deals that were non-QM, compared with jumbo prime collateral,” he said. “Those are now getting done maybe 10bp-20bp wider.

“The market is absorbing this supply with less pricing power than it had in the past. That’s really a function of the fact that the collateral has performed well, the deals have increased credit enhancement and better underwriting (compared with the pre-crisis market).”

Read the full article at International Finance Review (paywalled).