Commentary on the Westpac $1 billion mortgage securitisation, launched yesterday, has suggested that the bank may pay a premium for funding diversification and to advertise that it has not lost its arranging skills while the market was closed. But a source close to the transaction, Series 2009-1 WST Trust, says the bank is confident it can price the deal, which is expected on Thursday or Friday, at a rate comparable to its recent term funding.The bank yesterday announced that it has launched a $1 billion RMBS issue. The $920 million of Class A notes are expected to be rated AAA. Westpac is attracted to the advantages of diversifying funding through the recovering securitisation market, but pricing must be efficient.The other appeal of issuing RMBS is that most investors are expected to be local (around 60 per cent of the issue will go to onshore investors), whereas term funding is predominantly offshore.The Standard & Poor's presale report issued yesterday shows that the bank is offering a very strong portfolio of assets. The pool of loans supporting the issue has a low average loan to valuation ratio and a high level of seasoning.The average loan to valuation ratio is 58.3 per cent. A quarter of the loans are interest only, and 22.1 per cent are in non-metropolitan areas. The weighted average loan seasoning is 34.8 months, which S&P said was high compared to other Australian RMBS pools. "Seasoned loans are less likely to default given the borrowers have a demonstrated history of loan servicing."S&P said previous WST transactions had had a mixed performance. The arrears for loans originated under the WST program prior to May 2005 have tracked above the level of S&P's Prime Mortgage Performance Index (SPIN).But since then arrears for loans securitised under WST "have shown significant improvement and continue to be sustained at a level below SPIN."