The development of the domestic securitization market appears to have reached a crossroad. The residential mortgage-backed sector - the traditional driver of the market's growth - is showing signs of maturity, and commercial real estate is becoming an increasingly important source of assets. Evidence of the maturity of the RMBS sector can be seen in the consolidation taking place among lenders' mortgage insurers, where U.S.-based PMI is moving to acquire the British-owned CGU, thereby reducing the number of players in the market from four to three. The implications of this, as spelled out in a recent Moody's Investors Service research report, are arguably more interesting than events in what has now become a largely commodity-like primary issuance market.

Much of the commercial real estate sector, however, remains virgin territory from a securitization point of view. The two latest deals, announced within a month of each other, are innovative. One represents the first time in Australia that securitization has been used to finance a residential unit construction project, and so effectively launches a new asset category into the structured bond market. The other is innovative in a more narrowly technical sense, being the first rated capital markets transaction in the country to bring together credit lease-backed and commercial mortgage-backed securities under the same issuer.

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