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Pepper Homeloans (Pepper) closed its A$260 million (US$257 million) residential mortgage-backed securities (RMBS) deal on December 20, in the first non-conforming RMBS to come to the Australian market since the financial crisis. While prime loans comprise 60 per cent of the pool, loans extended to borrowers with prior credit impairment make up 40 per cent and loans extended on a limited documentation basis represent 66.9 per cent of the pool.

International Finance Corporation (IFC) (AAA/Aaa) priced an increase to its March 2015 Kangaroo line on December 15, including in the deal its first-ever floating rate Kangaroo tranche. The deal comprises A$400 million (US$397.8 million) of fixed rate paper as a tap to the existing line alongside A$250 million of floating rate notes (FRNs) of the same maturity.

The New Zealand Debt Management Office (NZDMO) announced on December 14 that its government bond issuance programme for 2010/11 has been increased to NZ$13.5 billion (US$10.1 billion) from the previous target of NZ$12.5 billion. As the half-way point of the financial year approaches the NZDMO has completed NZ$7.8 billion of borrowing in 2010/11.

PSIS issued a NZ$100 million (US$74.7 million) residential mortgage-backed securities (RMBS) deal on December 13, in what is only the second New Zealand RMBS transaction since the financial crisis. According to the issuer it is also the first prime RMBS to be issued to third-party investors in New Zealand without lender's mortgage insurance.

Australia's federal opposition has offered in-principle support to legislation, slated for early 2011, that will for the first time allow domestic authorised deposit-taking institutions (ADIs) to issue covered bonds. In a statement, the shadow treasurer, Joe Hockey, highlights covered bonds as one of two specific measures included in the government's banking sector reforms package that the opposition welcomes.

The Australian Securitisation Forum (ASF) issued an immediate positive response to the December 12 announcement of a raft of government measures to support and expand the Australian asset-backed market via both securitisation and the introduction of covered bonds. An ASF statement says the organisation is "delighted that the government acknowledges the vital and productive role that securitisation plays".

Australian federal Treasurer, Wayne Swan, revealed the government's long-awaited banking system reforms on December 12. Among a raft of significant measures, Swan proposes that Australian financial institutions (FIs) should be allowed to issue covered bonds and that exchange trading of government bonds be introduced to help plans to develop a deep and liquid corporate bond market.

In line with plans revealed by the regulator at the end of November, on December 10 the Australian Prudential Regulation Authority (APRA) sent a letter to banks explaining its revised capital relief approach to securitisation. The new policy offers authorised deposit-taking institutions (ADIs) a deduction from tier one capital requirements relating to the volume of subordinated securitisation tranches they have to retain on balance sheet.