Macquarie Securitization Ltd, a wholly-owned subsidiary of Macquarie Bank and Australia's largest issuer of mortgage-backed securities (MBS), has priced its first A$-denominated securitization (MBS) since February 2000.
Deutsche Bank and Macquarie Debt Markets acted as joint lead managers on the A$750 million ($409.9 million) transaction.
The deal, otherwise known as PUMA Masterfund P8, is backed by a portfolio of first registered mortgages with a weighted average loan-to-value of 73.4% and average seasoning of 29 months. Some 68.2% of the loans are secured on properties in New South Wales.
The transaction was split into a three-year A$340 million fixed rate tranche, 5.8-year average life A$385 million floating rate piece and A$25 million of subordinated notes. Both Moody's and S&P have provisionally given triple-A ratings to the senior tranches, with S&P rating the subordinated bonds AA-.
The three-year notes priced at 37bp over the three-year swap rate and the 5.8-year bonds at 39bp over the three-month bank bill swap rate (BBSW). Pricing for the subordinated tranche was undisclosed.
Pricing was pretty much in line with recent offerings from two of Macquarie's competitors, Interstar Securities and RAMS Mortgage Corp. Interstar's latest A$750 million deal, which priced two weeks ago, featured four triple-A tranches, as rated by S&P, with pricing of 36bp over the one-month bank bill swap rate (BBSW) on the 2.81-year average life A$225 million floating rate piece, 39bp over on the 4.08-year A$247 million fixed rate bonds and 42bp plus BBSW on the 5.83 year A$150 million tranche.
Meanwhile, RAMS Mortgage Corp came to market recently with its A$1.2 billion offering. At launch, pricing for the triple-A paper was 32bp over BBSW on the 1.54-year A$350 million piece and 39bp over for A$604 million of 4.68 year bonds. In addition, RAMS offered something for short-term buyers with an A$200 million A1+ rated piece, which has a 0.41 year average life and priced at 21bp plus BBSW.
Some players in the Aussie market have expressed concerns over the ability of domestic investors to absorb the volume of MBS issued, with a tendency in recent times to see smaller deals. Indeed, Interstar had to reduce its recent MBS issue from A$1 billion to A$750 million.
Given the current conditions, Phil Richards, treasurer at Macquarie, was pleased with the pricing, adding that the company had to look to overseas accounts to place most of the paper. "We are happy with the pricing, given the recent comparable issuers from two of our competitors," he says. "As for placement, the domestic market has been congested recently and the majority of this transaction was placed with offshore investors, mostly banks and funds."
Given that Macquarie has done five Euro issues (for a total of $3.35 billion) รป on top of 12 previous domestic deals and two globals - it seems logical to suggest that most of the foreign buyers would have come from Europe, but Richards also noted that there strong interest from Asia.
"During the past couple of years while we were establishing our global programme, we spent a lot of time doing roadshows in Asia, and some of these investors were also keen to participate on our domestic deals," adds Richards. "Consequently, we had some good orders from the region for this transaction."
