The year has begun well for the domestic Australian mortgage-backed sector, with a rush of deals worth more than A$3.5 billion (US$2.2 billion), an interesting technical innovation and new credit ratings that should save at least three issuers some basis points off their trading spreads.

A key theme to have emerged is the sheer diversity of funding sources within reach of Australian issuers: nearly half the deals in terms of value have targeted the domestic market. While it is premature to suggest that a trend might be developing, the high proportion of domestic issuance represents a sharp divergence from the pattern established during the last two years when the volume of Australian MBS transactions was weighted towards the European and global markets.

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