Price guidance for China's first cross-border CMBS by Macquarie Wanda Real Estate Fund - called Dynasty Assets - has been moved outwards to 75 to 85 basis points over Libor (ASR, 9/18/06). The $145 million deal, arranged by Citigroup and Macquarie Bank, had been due to price last week.
Initial guidance of 65 basis points had been set for the 2.75-year notes - rated A2'/'A' by Moody's Investors Service and Standard & Poor's. However, some market vets regarded that as optimistic given the alternatives available, and are not surprised guidance has been revised.
"You could get over 100 basis points for the triple-B pieces on recent bank-issued Australian CLOs," one banker said. "OK, there's always additional risk with buying CLOs, but that is mitigated by the fact the issuers are strong Aussie banks. The China deal benefits from the reputation of the arrangers and borrower, but the risks associated with onshore assets remain, so 65 basis points does not represent good value."
Elsewhere, it was a rare quiet week in Australia with just one deal launched. Adelaide Bank last week met with domestic investors for an A$1.4 billion-equivalent ($1 billion) RMBS through its Torrens program. ABN Amro and Deutsche Bank are joint lead managers. Adelaide Bank will this week meet with investors in Asia and Europe, with pricing scheduled for Oct. 13.
The transaction is backed by 9,207 prime mortgages worth A$1.5 billion, with a weighted average loan-to-value of 68.8% and seasoning of 19 months. The deal features 100% mortgage insurance, with PMI and Genworth providing the bulk of the cover.
Fitch Ratings, Moody's and S&P assigned triple-A ratings to the 500 million A1 piece, which has a 2.6-year average life, and the A$500 million of 2.5-year A2 bonds. The A$46.5 million sub piece is rated AA'/'Aa2'/'AA' with a 6.1-year average life.
Specialist originator Resimac provides the most relevant pricing benchmark, last month closing a A$1.4 billion equivalent RMBS via Barclays Capital and Societe Generale. The 535 million triple-A rated A1 notes offered an 11 point spread over Euribor for 2.86-years, while the A$400 million senior domestic paper ended 18 points over the Bank Bills Swap Rate for 2.79-years.
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