Moody's Investors Service claims to have provided a "jumpstart" for the securitization of middle-market business loans in Australia, with the development of a default risk assessment model based on credit data provided by the seven biggest Australian banks.
Morris Batty, the head of policy and portfolio management at ANZ Banking Group - one of the banks that took part in the project - described the initiative as "one of the most significant advances in the Australian credit markets in recent years." The data - 110,000 observations of 35,000 firms and 1,000 defaults - has been modeled using the rating agency's RiskCalc methodology, already in use in the U.S.
Business loan securitization is in its infancy in Australia, where the market is dominated by securitized residential mortgages. The full list of participating banks was not disclosed.
Separately, Moody's said that structured finance issues in Australia this calendar year could total A$20 billion (US$11.73 billion), a 16% increase on last year's A$17.2 billion. The agency noted the high proportion of offshore issues and said that cross-border transactions by Australian issuers would become more complex and elaborate. This would be in keeping with a trend in the domestic market, where issues have been structured to reflect the needs of specific investors.
