Commonwealth Bank of Australia issued a new AUD1 billion ($1.03 billion) prime RMBS from its Medallion trust series.
The deal, which is rated by Standard & Poor's, will offer investors AUD751 million Class A1 notes, rated 'AAA'; AUD175 million Class A2 notes, rated 'AAA'; AUD36 million Class AB notes rated 'AAA' and AUD18 million class AC notes rated 'AAA'. The Class A2 notes are structured as fixed interest, non-amortizing notes until the A2 refinancing date. No principal is paid to the class A2 note prior to the A2 refinancing date, which is on approximately the fifth anniversary of the notes.
Any principal that would otherwise be paid to class A2 noteholders will be invested in a general interest charge (GIC) account until the A2 refinancing date.
Before the A2 refinancing date, the manager will seek to market the issuance of class A2-R (refinance) notes with an invested amount equal to the invested amount of the class A2 notes, less the expected balance of the GIC account on the A2 refinancing date.
If the class A2-R notes are successfully issued, the existing class A2 notes will be fully repaid from the class A2-R notes issuance proceeds and amount in the GIC account on the A2 refinancing date.
If the manager is unable to issue the class A2-R notes, and the balance of the GIC account on this date is not enough to redeem the class A2 notes in full, the class A2 notes will convert to class A2-R notes. The class A2-R notes will be variable rate, passthrough notes.
Funds in the GIC account on the A2 refinancing date will be used to redeem the class A2 notes.
