Commonwealth Bank of Australia last week priced the largest Australian securitization through its Medallion program. Since CBA enjoyed strong demand from Europe, the U.S., Australia and Asia, the deal was upsized from A$5 billion ($3.66 billion) to A$5.5 billion ($4 billion).
There has been only one other international RMBS from an Australian issuer in 2006 - St. George Bank's A$3 billion ($2.2 billion) deal (ASR, 2/27/06).
Credit Suisse and Deutsche Bank acted as joint leads on the CBA transaction, issued in U.S. dollars, euros and aussie dollars. The deal was backed by a pool of prime mortgages with a weighted average loan-to-value of 66.6% and seasoning of 20 months. PMI Mortgage Insurance covers 71.9% of the pool with GE Mortgage Insurance guaranteeing the remainder.
Much interest focused on the inclusion of the first Reg AB tranche (registered with the Securities and Exchange Commission) issued by a foreign borrower. The $2 billion piece, rated triple-A' by Fitch Ratings, Moody's Investors Service and Standard & Poor's, priced in line with expectations for a spread of five points over Libor on a 2.71-year average life.
The E450 million ($535 million) tranche, also rated triple-A' with a 2.71-year average life, priced at seven basis points over Euribor. The A$2 billion ($1.47 billion) triple-A' piece finished 13 basis points over the bank bills swap rate (BBSW), a new benchmark.
All three tranches priced one basis point inside their equivalents on St. George's deal.
Details on investor distribution and the spread for the double-A'-rated A$66 million ($48.4 million) subordinated tranche, which has a 4.8-year average life, were not available.
Australia's domestic market is also showing signs of life. Liberty Financial last week completed an A$1.2 billion ($879.6 million) securitization of non-conforming mortgages (ASR, 3/6/06). Significant interest saw Liberty's deal - also arranged by Credit Suisse and Deutsche - upsized from A$1 billion ($733 million) and pricing at the tight end of the marketed range.
The A$417.2 million ($305.8 million) money market piece, rated P1/A-1+' by Moody's and S&P, priced at 12 points over the BBSW on a 0.42-year average life. The A$670 million ($491.1 million) two-year tranche, rated triple-A,' offered a 25 basis point spread.
Also, A$93.96 million ($68.9 million) of BBB+' bonds offered a 100-point spread for 2.7 years. The A$18.84 million ($13.8 million) double-B' tranche pays 350 points over BBSW.
The bonds placed with 45 investors, 11 of which came from outside Australia.
In addition, property developer Australand completed a A$267.5 million ($196.1 million) CMBS, as nonconforming mortgage lender Interstar Wholesale Financing launched its latest RMBS.
Australand's deal is backed by income generated by 24 commercial properties. Westpac acted as arranger with ANZ Investment Bank co-manager. It was the borrower's second CMBS following a A$315 million offering in June 2004.
The five-tranche deal has an expected maturity of five years. Occupancy for the properties is 98%. The average lease maturity is 7.9 years. Australand will use proceeds for working capital and to refinance existing debt.
The deal includes A$169 million ($123.9 million) of senior notes, rated triple-A' by S&P, which priced at 17 points over BBSW. The A$29.5 million ($21.6 million) double-A' tranche offered a 22 point spread, while A$25.5 million ($18.7 million) of single-A' paper finished at 30 points over BBSW. The A$29.5 million triple-B' tranche and A$14 million ($10.3 million) triple-B minus' piece priced at 47 and 58 basis points over BBSW, respectively.
Fresh from completing an A$80 million ($58.7 million) net interest margin securitization (ASR, 3/6/06), Interstar will issue a A$1 billion offering collateralized by subprime mortgages.
The underlying pool includes 4,606 loans with an outstanding principal of A$979 million ($718.2 million), loan-to-value of 71.65% and seasoning of 4.8%. Fitch and S&P have assigned triple-A' ratings to two senior tranches with an accumulated value of A$980 million, and double-B' to the A$20 million ($14.7 million) sub-piece.
Elsewhere, property developer CapitaLand, Singapore's most active securitizer, has started marketing its latest cross-border deal. HVB is the arranger on the $332.7 million transaction, backed by sales of apartments in two uncompleted residential complexes in Singapore.
Over half of the 1,131 apartments in the City Lights and Varsity Park developments have been sold under deferred payment deals. According to estimates, future sales will total S$659 million ($407 million).
It will be the sixth deferred payment securitization from a Singaporean developer and the fourth by CapitaLand, the most recent being a $155.6 million offering in April 2004.
The latest deal, issued from the Farimar Investment SPV, benefits from a construction facility provided by HVB to cover costs until project completion, expected between December 2007 and February 2008.
The three-tranche floating rate deal has a legal final maturity of December 2009. It includes $292 million of senior notes rated triple-A' by Fitch and Moody's; $22.2 million of double-A' paper; and an $8.5 million single-A' rated sub-piece.
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