Members Equity rounded off a record six months of offshore issuance by Australian mortgage securitizers when it priced and signed its first international offering, a US$700 million global transaction structured as a eurobond with 144A "bolt on" documentation.
The deal brought to A$7.3 billion (US$4.39 billion) equivalent the volume of offshore MBS deals by Australians so far this year, compared to A$3.5 billion in the domestic market and A$6 billion offshore for the whole of 1999.
The issuer is a joint venture between the former National Mutual insurance and funds management business - now owned by French financial services giant, Axa - and Industry Super Funds, a trades-union affiliated superannuation management business.
The SMHL Global Fund No. 1 transaction (SMHL stands for super members' home loans) consisted of US$225 million of Class A1 notes with an average life of 0.75 years; US$400 million of 3.9-year Class A2 notes, US$75 million of 6.7-year Class A3 notes and A$10.5 million of domestically placed Class B subordinated paper.
The senior tranches were priced at 9, 25.5 and 31 basis points respectively over three-month Libor. Pricing for the subordinated tranche was unavailable. Credit Suisse First Boston was lead manager with ABN Amro as co-manager.
Adelaide Bank also made its offshore debut. Its US$730.5 million transaction, a euro/144A-style global, was similar to the Members Equity deal. It even had a similar syndicate line-up - ABN Amro as lead with CSFB and Morgan Stanley Dean Witter as co-managers.
The single tranche of senior Class A notes, which had an average life of three years and five months, priced at 26 basis points over one-month Libor. The A$46.9 billion of subordinated Class B paper was placed in the domestic market at 65 basis points over the one-month bank bill swap rate.
A third MBS issuer, Interstar Securities Australia, issued internationally for the first time with a conventionally-documented euro MBS transaction. The US$465 million of Class A2 senior notes with a weighted average life of 4.4 years sold at 28 basis points over three-month Libor, while the A$60 million domestic sub debt with a five-year WAL sold at 70 basis points over three-month BBSW. This transaction was jointly lead managed by local investment bank Macquarie Bank and Britain's Barclays Capital.
In the domestic market, Bendigo Bank made its second issue in two years with an A$173 million transaction through its Banksia Series 2 Trust. The deal securitized home loans acquired as a result of its acquisition of IOOF Building Society last year.
Lead manager Macquarie Bank said the A$48 million of Class A1 notes with an expected life of 0.57 years priced at 22 basis points over the one-month BBSW, and the A$121.2 million of Class A2 notes with a 4.07 year expected life priced at 44 basis points over. The A$3.8 million subordinated Class B tranche was privately placed. The margin was kept confidential.
