Standard & Poor's has predicted a strong year for the Australian structured finance market, after rating 56 transactions last year worth A$33 billion (US$20 billion). In 1998 S&P rated 55 transactions worth A$22 billion.
The value of actual issues was A$25.7 billion (compared to A$16.1 billion in 1998), bringing outstandings in the mortgage- and asset-backed markets in 1999 to A$69.9 billion. Residential mortgages continued to dominate the asset categories, accounting for 62.4% of deals, although S&P acknowledged the trend towards asset diversification.
This year would see "significant consolidation" in MBS issuance, said the ratings agency, "the expansion of the market into new areas such as commercial mortgage-backed securities, market value analysis, and the increasing use of derivatives to more easily spread risk among issuers." Offshore issuance had grown sharply during 1999, consisting of nine deals worth A$8.9 billion, compared to five deals totaling A$5 billion in 1998.
Elsewhere, turmoil on Credit Suisse First Boston's New York securitization desk following the defection of co-heads Phil Weingord and Jorge Calderon to Deutsche Bank has raised questions about the future handling of two key mandates being worked on by CSFB's Sydney office.
These are the first, A$1 billion, offshore mortgage-backed issue for Super Members' Home Loans (a joint venture between French-owned AXA Insurance and a local trade union superannuation fund management business, Industry Super Funds); and a follow-up transaction for the highly successful US$994 debut global MBS last year for St George's Crusade Global Trust.
The SMHL deal is likely to be a euro MBS offering with a Rule 144A component. CSFB executives in Sydney stressed that the firm had lost no staff in Australia, nor any on Wall Street that were involved in Australian securitizations. SMHL and St George were said to be supportive of their lead manager, but keeping a close eye on developments.