There was plenty of activity Down Under in the past week, with CNH Australia completing its agricultural equipment ABS, Macquarie Securitisation launching the latest RMBS from its Puma Masterfund program, and diversified property trust Cromwell marketing its debut commercial mortgage-backed deal.

CNH issued its fourth transaction from the CNH Capital Australia vehicle, an A$420 million ($303.3 million) offering backed by 5,253 contracts with a weighted LTV of 70.9% and seasoning of 10.8 months.

Societe Generale was arranger on the deal, which features an A$367.5 million senior tranche rated AAA' by Fitch Ratings and Standard & Poor's. Even though the notes were marketed at around 20 basis points over the bank bills swap rate, huge demand saw that finish at 18 basis points, a new low for the market. At that level, there was 2.8 times oversubscription.

One banker not involved described the pricing as a "tremendous result for the borrower and Australian market, highlighting how strong demand is for good quality ABS deals."

An RMBS mainstay

Macquarie is Australia's most frequent issuer. Its latest A$1 billion RMBS will be the borrower's 32nd deal, with Deutsche Bank and Macquarie joint arrangers.

The transaction is backed by a pool of 3,726 prime mortgages with an average LTV of 73.4% and seasoning of 14.6 months. All the loans feature insurance, with Genworth covering 59.3% of the pool and PMI Mortgage Insurance the remainder.

Moody's Investors Service and S&P assigned triple-A ratings to the A$980 million senior piece, which has a weighted average life of 2.6 years. In addition, an A$20 million subordinated tranche, which has a six-year average life, is rated Aa2/AA.

A source at Macquarie said there would be no formal road show for the transaction, but said it was being marketed in Europe, Asia, Australia and New Zealand.

"We expect strong participation from both offshore and domestic investors, in line with current market sentiment," said the source. "Offshore investors have made up significant portions of the demand for Aussie dollar RMBS in recent times and have been strong supporters of the PUMA name."

While no official price guidance has been released, some observers expect Macquarie to match the record 13 basis point spread over BBSW established by CBA on its A$5.5 billion transaction in March (ASR, 03/13/06).

Whatever the outcome, pricing will be tighter than Macquarie's most recent deal, an A$1.25 billion RMBS offering in October 2005. The senior notes on that deal offered a 17-point spread for a 2.4-year average life.

Cromwell's CMBS

Staying in Australia, Cromwell launched an A$452 million CMBS arranged by Westpac. The deal will be collateralized by rental income from 21 commercial, industrial and retail properties located throughout Australia.

The average lease term on the properties is 5.5 years, with 43% of current income derived from government-linked tenants. The debt service coverage ratio for the senior bonds is 2.17 times.

One notable feature of the deal is the inclusion of sub-investment grade notes, a first in a single-borrower Australian CMBS. S&P rated the A$266 million senior tranche triple-A, while the deal has five-subordinated tranches ranging from AA' to BB+'. All the notes have an expected maturity of three years.

The most recent Australian CMBS was an A$315 million issue by Australand last month (ASR, 03/13/06). The five-year triple-A piece priced at 17 basis points over BBSW.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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