Macquarie Securitisation, Australia's most active issuer, last week completed the latest RMBS from its PUMA program. Due to huge local and offshore investor support, the multicurrency deal was upsized from A$2.1 billion-equivalent ($1.6 billion) to A$3.3 billion. Citigroup, Deutsche Bank and Macquarie Bank - the borrower's parents - acted as joint leads on the offering with Royal Bank of Scotland co-manager.
The deal marked a number of firsts for Macquarie, including being its largest securitization to date, and the first to include a Euro tranche.
In addition, the seven basis points over three-month Libor spread achieved on the 2.81-year triple-A rated $1.65 billion A1 piece was the tightest by Macquarie for U.S. dollar-denominated notes.
The 400 million ($514.4 million) Eurobond - also rated triple-A by Moody's Investor's Service and Standard & Poor's - ended 10 points over Euribor for 2.81-years, while the A$400 million senior domestic piece offered a 17 point pickup over the Bank Bills Swap Rate (BBSW) for 2.74-years. The double-A rated A$87 million subordinated bonds finished 25 points over BBSW for 5.98-years.
According to Macquarie, 42 investors participated in the deal, including several new accounts to the PUMA program. Even at the increased size, the company said the deal was "significantly oversubscribed."
Some 52% of the orders came from U.S. buyers; 41% from Europe, 5% from Australia and the remaining 2% went to Asian investors.
Another Macquarie ABS
Meanwhile, another company in the Macquarie group has launched its debut securitization. Listed property trust Macquarie Countryside - which manages a portfolio of supermarkets and shopping malls - hired National Australia Bank and Macquarie Bank to arrange a A$450 million commercial mortgage-backed offering.
Roadshows were held last week in Brisbane, Melbourne and Sydney, with pricing expected in early December.
The deal is collateralized by first registered mortgages secured over 52 shopping malls and supermarkets located throughout Australia, which have an average lease expiry of 8.6-years.
According to S&P, the transaction is one of the largest Australian CMBS issues in terms of number of properties and geographical diversity. "The program benefits from the stability associated with grocery-based retail property; a spread across metropolitan and regional locations; and a long lease-expiry profile," Narelle Coneybeare, S&P credit analyst, said.
The debt service coverage ratio for the senior bonds is 1.78 times. In addition to significant overcollateralization, credit enhancement comes via a A$22 million liquidity facility.
The five tranches have a scheduled maturity of three years and legal final of four and a half years. S&P assigned triple-A ratings to the A$330 million A-class notes, a double-A rating to the A$50 million B-tranche and single-A to the A$25 million C-class piece. The A$30 million D tranche and A$15 million of E-class bonds are respectively rated triple-B and triple-B minus.
Mobius Financial's fourth
Staying Down Under, Mobius Financial Services has completed its fourth public RMBS via the Mobius Trust. The A$450 million deal, backed by a pool of subprime and nonconforming mortgages, was arranged by Barclays Capital and Commonwealth Bank of Australia.
The A$266 million of super senior class A1 notes - rated triple-A by Fitch Ratings and S&P - priced 29 basis points over BBSW for a 2.5-year average life, one point inside initial price guidance.
In addition, the A$93.6 million A2 notes - also rated triple-A - and A$23.3 million double-A rated B class bonds both finished at the tight end of the marketed range, respectively paying 38 points for 2.5-years and 57 points for 3.9-years.
The A$27.8 million single-A rated bonds offered a pick-up of 85 basis points. Spreads were not disclosed for the three subordinated tranches rated between triple-B and single-B or the unrated equity piece.
Fitch on Aussie delinquencies
Last week Fitch forecasted Australian home-loan delinquencies would increase over the next six months; reversing the decline that took place in the third quarter of 2006. The prediction was made in Fitch's latest Dinkum Report, and is based on the combined effects of three interest rate hikes this year and the anticipated increase in credit card purchases over the Christmas period.
The Fitch Dinkum Index shows 30+ days delinquencies for prime loans used in RMBS deals remained at 1.2% in the third quarter, and the agency expects this to remain relatively stable going forward.
"Despite the three interest rate rises during the year, Australian RMBS mortgages have performed robustly supported by strong economic fundamentals," Ben McCarthy, head of Fitch's Australian structured finance group, said. "Fitch expects Australian RMBS to continue to perform strongly at least in the short to medium term, despite the expected rise in delinquencies towards the end of the year."
However, delinquencies of low documentation loans - typically extended to self-employed borrowers - were much higher at 3.4% and may not yet have peaked, Fitch said.
Transaction performance would remain robust, the rating agency said, even if the figure rose to between 4% and 5%. Even so, the agency notes low-doc delinquencies have been on an upward climb during a period of economic stability, rising from 1.2% in September 2003, to 3.4% in September 2006. Any downturn could result in a marked impact on the low-doc sector.
"While the higher delinquencies are well within Fitch's modeled scenarios, the deterioration has occurred in benign economic times with strong economic fundamentals," McCarthy said. "The upward movement in interest rates will have a significant impact on the borrowers, particularly on the low-doc borrowers, who are more vulnerable to economic shocks."
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