Following an unusually barren January for the Australian securitization market, St. George Bank finally got things rolling with the latest residential mortgage-backed deal from its Crusade program. The A$3 billion-equivalent ($2.2 billion) 144a private placement was issued in three currencies: U.S. dollars, euros and Australian dollars. It was St. George's 11th global offering and 18th MBS.

Credit Suisse and Deutsche Bank acted as joint lead managers for the five-tranche transaction, which has a legal final of July 2038.

The underlying pool consists of 16,688 loans worth A$3.1 billion ($2.3 billion) with a weighted average LTV of 64.5% and average seasoning of 1.4 years. Almost half the loans are in New South Wales. A guarantee from PMI Mortgage Insurance covers 59.6% of the portfolio, with a St. George subsidiary insuring a further 40%.

Three senior tranches were rated triple-A by Fitch Ratings, Moody's Investor's Service and Standard & Poor's. The $700 million A1 piece, upsized from $600 million, priced in line with expectations at 6 basis points over Libor for a 2.96-year average life.

The 500 million ($596.3 million) A2 tranche, downsized from 800 million ($954.2 million), priced at the wide end of the indicative range, offering 8 points over Euribor for 2.96 years.

The A$1.3 billion ($959.5 million) A3 bonds offered a pickup of 14 points over the bank bills swap rate (BBSW) for 2.9 years. High demand caused the upsizing of this tranche from A$900 million and pricing at the tight end of the marketed range.

Two subordinated tranches were structured into the deal. The A$47.1 million B-notes - rated AA by Fitch and Moody's - came in at 22 basis points over the BBSW for 5.1 years, a good result considering pricing in the mid-20s was expected. There was also strong demand for the A$25 million C-notes. Rated A+ by Fitch and AA- by S&P, the tranche offered a pickup of 32 points over BBSW for a 4.8-year average life. Information on investor allocation was not available.

Meanwhile, Commonwealth Bank of Australia appears to be the next Aussie bank to tap global RMBS investors. According to reliable sources, this week CBA will begin marketing for the latest offering from its Medallion Trust facility. The deal could be the largest Aussie RMBS on record, with estimates putting its size between A$4 billion ($2.95 billion) and A$7 billion ($5.2 billion).

Rumors suggest Credit Suisse and Deutsche will team up to handle the transaction, which will certainly feature U.S. dollar and Aussie dollar tranches, and possibly one in euros, depending on market sentiment. Launch is expected in March.

CBA will set a precedent by becoming the first foreign company to issue a Reg AB transaction in the U.S.

"Registering the deal with the Securities and Exchange Commission is an interesting strategy," commented one observer. "The logic would be that investors will perceive CBA's deal as having better disclosure than private deals, which may have positive pricing benefits."

CBA holds the benchmark for Aussie global RMBS deals, achieving in May 2005 pricing of just 4 basis points over Libor on a $1.4 billion Citigroup-arranged offering. With the additional prep work required on a Reg AB issue, the bank will at least hope to equal that spread this time around.

Also in Australia, the commercial mortgage-backed sector saw its first activity in 2006 with deals by property developer Leda Holdings and listed property trust JF Meridian Trust.

Leda's A$300 million ($221.4 million) four-year deal - arranged by ANZ Bank and Westpac - is collateralized by shopping malls and is the second refinancing of a CMBS originally issued in 1999.

Since the first refinancing was completed in 2002, three new malls have been added to Leda's portfolio, which has a LTV of 52.1% and a debt service coverage ratio of 1.27 times.

The four-tranche transaction includes A$205 million ($151.3 million) of triple-A paper, which priced at 17 points over the BBSW; A$25 million ($18.5 million) of AA-rated notes offering a 22-point spread; A$30 million ($22.1 million) of single-A paper paying 30 basis points; and a A$40 million ($29.5 million) triple-B piece that launched at 49 basis points.

When Leda completed its first refinancing in 2002, spreads on the triple-A piece were 45 basis points and 150 points over BBSW for the triple-B tranche, highlighting how much more cost-efficient securitization is these days for Aussie borrowers.

JF Meridian's deal, led by Westpac, saw an additional A$83.8 million ($61.8 million) issued from its TMT Finance vehicle. The facility has raised A$289 million since it was established in 2002, supporting Meridian's efforts to expand its portfolio of office, retail and industrial properties.

The latest offering, which matures in December 2007, featured A$35.8 million ($26.4 million) of triple-A notes paying 18 points over BBSW and a A$48 million ($35.4 million) AA-piece offering a 59-point spread.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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