Members Equity, one of Australia's most active issuers, has launched the latest prime RMBS from its SMHL program. Deutsche Bank and Macquarie Bank are joint lead managers on the A$1 billion ($766.5 million) transaction.
The deal is backed by a pool of 4,641 loans with an outstanding principal of just under A$1 billion, weighted average LTV of 63.4% and seasoning of 18 months. Genworth and Commonwealth Bank of Australia provided the mortgage insurance on the offering.
The transaction is split into A$982 million of senior notes, rated triple-A by Moody's Investors Service and Standard & Poor's, plus a subordinate piece rated Aa2'/'AA'.
Members Equity last tapped the market in September 2005 with a $1.9 billion global offering. Although its latest deal is issued entirely in Aussie dollars, it is expected to attract significant offshore interest, particularly from Europe and Asia.
Meanwhile, another Australian MBS issuer, Suncorp Metway, also priced a A$2.5 billion equivalent offering late last week. The deal, issued through the Apollo Program, saw the borrower, plus joint leads ABN Amro and Societe Generale, embark on roadshows in Australia, Europe and Asia.
The A$1.485 billion senior domestic piece - upsized from A$1 billion and rated triple-A by Fitch Ratings, Moody's and S&P - priced at 14 basis points over the bank bills swap rate on a 2.6-year average life, in line with market expectations. The tranche was two times oversubscribed.
The A$66.3 million subordinated paper - rated double-A - ended 18 basis points over BBSW for 4.8-years, and were 2.1 times covered at the spread.
In addition, the deal featured a triple-A rated E570 million piece - upsized from E400 million. Pricing at eight points over Euribor - the tight end of the indicative range - the 2.7-year notes were 3.3 times oversubscribed.
According to sources, over 50 accounts participated in the deal, with 52% of the notes placing in Europe, 33% in Australia and 15% in Asia.
Staying in Australia, mortgage originator RESIMAC has completed an A$40 million net interest margin securitization (ASR, 04/17/06). The deal was arranged by Macquarie Bank and issued through the RESIMAC NIM Master Trust facility.
The single-tranche transaction, backed by residual income accrued over RESIMAC's A$4.6 billion prime mortgage portfolio, has a three-year expected life and priced at 43 basis points over BBSW.
That is one point outside the mark set by Interstar Wholesale Finance in February on a 3.6-year A$80 million issue, brought to market by ABN Amro and Macquarie (ASR, 03/06/06).
Debating interest rates
Similar to the U.S., Australian market participants began debating what impact last week's 0.25% basis point rise in interest rates by the Reserve Bank of Australia - the first increase for 14 months - might have on issuance.
While the capital markets had already factored in the rise in the futures markets, thus limiting any change to issuers' plans in 2006, there has been some concern a rate rise might cause a slowing in the housing market.
At this stage, however, observers are reserving comment until after next week's budget. There has been some speculation that the interest rate rise will be offset by some form of tax relief.
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