It was another busy week in Australia with Members Equity Bank, Resimac and Citigroup pricing or set to price residential mortgage-backed offerings.
With the appetite for Aussie paper showing no signs of abating among offshore and domestic investors, Member's Equity will upsize the latest global issue from its SMHL program to A$3 billion-equivalent ($2.25 billion) from A$2.2 billion. The deal is backed by a 100% pool of prime mortgages.
Credit Suisse arranged the four- tranche, three-currency offering, due to price as of press time. The bank is joined in the underwriting effort by Societe Generale on the U.S. dollar and euro tranches and National Australia Bank for the domestic notes.
Indicative price talk for the triple-A rated $1.34 billion Reg AB tranche (registered with Securities and Exchange Commission) is six basis points over Libor on a 2.7-year average life. That would match the spread achieved by St. George Bank on its recent global offering (ASR, 9/25/06).
The 450 million ($571.3 million) A2 tranche - also rated triple-A - has been marketed at eight basis points over Euribor for 2.7-years, while price talk for the A$406 million senior domestic tranche is 16 over the Bank Bills Swap Rate for 2.63-years. Indicative pricing has not emerged for the double-A rated A$57 million subordinated piece.
Specialist mortgage originator Resimac, meanwhile, completed an A$1.4 billion-equivalent RMBS jointly led by Barclays Capital and Societe Generale. Around 28% of the pool consisted of low-documentation mortgages.
The 535 million A1 notes - rated triple-A by Moody's and S&P - ended 11 basis points over Euribor on a 2.86-year average life. Additionally, the A$400 million domestic senior bonds - also rated triple-A -offered a pickup of 18 over BBSW for 2.79-years while the Aa2'/'AA'-rated A$58 million sub piece will pay a 27 point spread over 4.81-years.
Citigroup self-arranged its A$300 million RMBS, sold through the Compass Master Trust. The deal, which utilizes a revolving structure, is unusual in that only 12% of the loans are covered by mortgage insurance. Aussie RMBS offerings usually feature 100% coverage, cited as a major selling point.
Despite this, Citigroup did not suffer any major adverse pricing consequences. With a 3.8-year average life, the A$288 million triple-A piece matched the 18 point spread achieved by Resimac on its senior domestic tranche, although the A$12 million sub piece came slightly wider at 33 basis points over BBSW.
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