The Australian securitization market last week built on the momentum established by St. George Bank's A$3 billion ($2.2 billion) global RMBS (ASR, 2/27/06), with Liberty Financial and Interstar Wholesale Financing launching deals.
Liberty, one of Australia's largest nonconforming mortgage lenders, pulled off a A$1 billion ($742.3 million) transaction issued from the Liberty Series 2006-1 Trust.
Credit Suisse and Deutsche Bank are joint leads on the four-tranche deal. Macquarie Bank joins the syndicate for the two senior tranches. Final pricing is expected on March 6.
Credit Suisse and Deutsche must enjoy working together, having fulfilled the same role on the St. George deal and secured arranger duties for Commonwealth Bank of Australia's upcoming global RMBS.
The underlying pool for Liberty's latest offering consists of 4,440 primarily floating rate loans worth A$910.4 million ($676.3 million), with the number of loans to be increased during the next three months. The weighted average loan to value of the portfolio is 76.27% with seasoning of 9.88 months. About 30% of the borrowers have impaired credit histories.
To tap into demand for short-term instruments, the deal was structured with a A$375 million ($278.6 million) money market piece rated A-1+/P1 by Standard & Poor's and Moody's Investor's Service. The notes have a one-year legal final and expected average life of 0.42 years. Early price talk suggests the bonds will offer a spread of around 10 basis points over the bank bills swap rate.
The other A$532.5 million ($395.6 million) senior tranche, rated triple-A by both agencies, has a 2.08-year average life with legal maturity reached in 2037. Price guidance suggests a pick-up of 20 basis points over the bank bills swap rate.
That would represent a positive result for Liberty, given the most recent nonconforming MBS - issued by First Mortgage Group in December 2005 - carried a 22 basis point spread on its senior tranche.
Price guidance was not available for the two subordinated pieces: the A$74.5 million B-class notes, rated BBB+' by S&P; and the A$18 million C-tranche, rated BB.' Both tranches have 2.75-year expected lives.
Interstar's securitization
Interstar completed a rare net-interest-margin securitization, backed by the excess spread accrued on A$16.6 billion of mortgages it has already securitized or funded through warehousing facilities.
ABN Amro and Macquarie Bank acted as joint leads on the A$80 million ($59.4 million) deal, issued through the Interstar NIM Master Trust.
It is only the second time the facility has been tapped, the other being in September 2004 when Interstar completed an A$180 million ($133.6 million) offering (ASR, 10/4/04).
The latest one-tranche transaction, rated A' by S&P, reaches legal maturity in July 2019 with an expected average life of 3.6 years. The notes priced at 42 basis points over the bank bills swap rate.
This result highlights how much Aussie spreads have contracted in recent years. On Interstar's last NIM offering, the pickup over the bank bills swap rate on the senior piece was 70 basis points, even though the average life (1.5 years) was significantly shorter.
CBA deal size confirmed
Additional details have emerged on Commonwealth Bank of Australia's upcoming global RMBS that was first reported in last week's edition of ASR. Size has been confirmed at A$5 billion ($3.7 billion), which will make it the largest Australian securitization to date.
The issuer and leads began Australian road shows last week, meeting investors in Brisbane, Melbourne and Sydney. The overseas leg of the tour, which will include major investment centers in the U.S. and Europe, will begin this week.
The deal, issued from CBA's Medallion Trust program, is backed by 28,754 prime mortgage loans with a weighted average LTV of 66.8% and seasoning of 20.3 months.
Tranche size has been confirmed at $2.3 billion, A$1.1 billion ($817.9 million) and E400 million ($477.6 million) for the three senior pieces, rated triple-A' by Fitch Ratings, Moody's and S&P.
An additional A$60 million ($44.6 million) sub-piece, rated double-B,' will provide credit enhancement for the senior notes.
Elsewhere, Siam Panich Leasing, the Thai consumer finance company, hopes to complete its debut THB5 billion ($127.9 million) auto loan ABS by the end of March. Standard Chartered and Siam Commercial Bank, holder of a 36% stake in the borrower, are joint arrangers. A presentation to institutional investors will be held in Bangkok on March 6.
The deal, issued through the Siam Panich SPV, is backed by a THB6.6 billion pool of hire purchase loans, equivalent to 24.4% overcollateralization for the rated bonds.
Siam Panich Leasing will sell two senior tranches, equally sized at THB2.5 billion ($63.95 million) and rated triple-A' by Fitch. The A-notes have a 2.5-year maturity, with a revolving period for the first year followed by controlled amortization for 1.5 years. The B-notes have a 4.5-year life, the first three years of which will be revolving followed by controlled amortization until maturity.
The company said the transaction will help lower its short-term debt and boost new loan origination.
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