The domestic Australian mortgage-backed market regained enough confidence a week after the attack on the U.S. to enable wholesale home-loan financier, Interstar Securities, to launch the biggest deal yet seen in the sector - a A$1 billion transaction lead managed by Macquarie Bank.

The deal consists of five tranches, including four senior tranches rated AAA by Standard & Poor's. Three of the four are vanilla floating-rate: A2 is A$200 million, with a weighted average life of 1.6 years; A3 A$200 million, 2.8 years; and A4, A$475 million, 5.3 years. The A$55 million A4 tranche is structured and carries an AAAr rating from S&P (AAA from Fitch) and has a WAL of 5.3 years. The subordinated, floating-rate B tranche is rated AA- by both agencies and consists of A$70 million with a WAL of six years. All tranches are callable on October 7, 2002. Pricing is scheduled for September 25 with settlement three days later. National Australia Bank is co-lead.

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