UPDATE 1-Bendigo Adelaide Bank ups RMBS issue to A$1 bln

SYDNEY, Dec 2 (Reuters) - Australian regional lender Bendigo and Adelaide Bank Ltd has increased a prime residential mortgage-backed securities (RMBS) issue to A$1 billion ($925 million), it said on Wednesday.

The issue, called Torrens Series 2009-3 Trust, was initially launched with a size of A$500 million.

The offer included A$915 million of triple A notes that paid 135 basis points over bank bill swap rate. The margin was in the middle of the 130-140bps initial price guidance range.

Pricing of the other two tranches of the deal was not disclosed.

The issue was jointly managed by Deutsche Bank and Westpac Institutional Bank.

Bendigo is the second local home lender, following ME Bank, to securitise mortgages without the participation of the Australian government as a cornerstone investor this year.

' was reflective of a market where confidence is gradually building and where sustainable pricing levels can now be achieved,' said Mike Hirst, Bendigo's managing director.

The government put in place late last year a support plan to help mortgage lenders weather the global financial crisis.

The issue pool, prior to the issue increase, included loans with an average loan-to-value ratio of 69 percent and an average time since issue, or seasoning, of 37 months. Interest-only loans make up 18 percent of the pool.

The loans are insured by Genworth Financial Mortgage Insurance Pty Ltd with 66 percent of the pool and by QBE Lenders' Mortgage Insurance Ltd with 34 percent. All the loans are fully documented.

Legal final maturity is January 2041 with settlement on Dec. 9.

Small lenders have suffered greatly since the U.S. subprime mortgage crisis because they are reliant on the securitisation market to fund their operations.


Deal details are as follows:
Class Amount Ratings Average life Margin

(mln) (S&P) (years) (bps)

A1 A$915 AAA 2.8 +135/1mBBSW

AB A$58 AAA 4.8 undisclosed

B A$27 AA- 4.8 unidisclosed
(Reporting by Cecile Lefort)
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