News
A flurry of securitisation deals from regional and non-bank issuers in the first half of July illustrate the continued revival of the asset class as a funding tool for smaller borrowers, issuers and intermediaries say. Securitised issuance is showing signs of increased breadth and depth, with issuers and intermediaries pointing to new foreign currency options as well as signs of life in non-conforming and subordinated tranches.
Preliminary ratings have been assigned to a new residential mortgage-backed securities (RMBS) deal from FirstMac. FirstMac Mortgage Funding Trust Series 1-2011 has a launch volume of A$175.6 million (US$185.3 million) and represents the borrower's first securitisation issue of the year, although it issued twice in 2010: a A$338.9 million restructure issue in May and a A$416 million new deal in September.
The latest buyback of government-guaranteed notes completed on July 18 as ME Bank (BBB/A2) retired A$413.5 million (US$438.8 million) of its A$500 million August 2012 line. The buyback, which was the fourth such transaction in the Australian market in just over a month, was split almost evenly between the bond's fixed and floating rate tranches.
Bendigo and Adelaide Bank (BEN) issued its first residential mortgage-backed securities (RMBS) transaction of the year on July 14. The A$1 billion (US$1.1 billion) deal – Torrens Series 2011-1 (Torrens 2011-1) – marks a major step for Australian RMBS currency diversification as its top-rated tranche is denominated in yen, at a size of ¥20 billion (US$253 million).
After several weeks of severely limited Australian market activity, deal flow finally kicked into gear this week as Kangaroo, corporate, bank and asset-backed issues fed a hungry investor base. Intermediaries suggest concerns around Europe may have moved into the background for the time being as a window for new issuance has opened.
On July 8, Volkswagen Financial Services Australia (VW Australia) (A-/A3) launched and priced a new four-year fixed rate domestic bond, following an Australian investor roadshow. The issue has a volume of A$150 million (US$161.6 million) and extends the borrower's domestic curve.
In what was the second Australian branch of an Asian bank to debut in the Australian market inside a week, Overseas-Chinese Banking Corporation Sydney Branch (OCBC Sydney) priced a new A$500 million (US$537.5 million) floating rate transaction on July 7 at 83 basis points over the bank bill swap rate (BBSW).
Resimac issued its inaugural non-conforming residential mortgage-backed securities (RMBS) deal on July 14 at a volume of A$250 million (US$268.3 million). Resimac Bastille Series 2011-1NC was upsized from an indicative volume of A$200 million and is a securitisation of non-conforming and limited documentation residential loans originated by Resimac.
Despite heavy borrowing in both bond and loan format since 2010, Fortescue Metals Group (Fortescue) (B+/B1/BB+) says it is likely to return to the debt market this year. However, while the company has yet to determine what market it will access, it has also suggested that the structure of group revenues means its focus will remain on US dollar funding rather than Australian dollars or the burgeoning renminbi market.