Macquarie Securitization Ltd, a wholly-owned subsidiary of Macquarie Bank and Australia's largest issuer of mortgage-backed securities (MBS), has launched its first A$-denominated securitization (MBS) since February 2000.
Deutsche Bank and Macquarie Debt Markets are acting as joint lead managers for 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 has been 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-.
Phil Richards, treasurer at Macquarie, feels it is the right time to return to the Aussie market having now established the bank in the US with a $1.2 billion issue last September. "It's been a while since we did an Aussie deal, which is mainly because of our strategy to move into the US market," he says. "We did our first global 144/A to establish ourselves and second to show our commitment to building a franchise in the US. It's also an issue of liquidity because you can do bigger deals in the US than Australia."
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. Interstar Securities, a competitor of Macquarie, had to reduce its recent MBS issue from A$1 billion to A$750 million.
Richards nonetheless is confident that finding investors for Macquarie's 13th domestic MBS û and 19th in all û will not be a problem. "Puma is a well established programme not just in Australia, but also in Europe where we have done five issues [for a total of $3.35 billion]," he asserts. "So we expect a good portion of the bonds will place with European accounts as well as local investors."
As far as pricing goes, Richards is realistic that, in the current climate, Macquarie is unlikely to get the same level pricing it was able to achieve back in 2000 on its last domestic deal. At the time, the triple-A rated A$450 million fixed rate tranche priced at 27bp over swaps and 6.9 year A$274 million floating rate notes priced at 47bp over. "Market conditions are different to what they were two years ago," Richards admits. "What I would hope and expect to see is that the latest issue is price competitive with the two recent deals from Interstar and RAMS."
Interstar's latest A$750 million deal, which priced last week, features four triple-A tranches, as rated by S&P, with pricing of 36bp over the 1-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. also came to market recently with its own A$1.2 billion offering. At launch, pricing for the triple-A paper was 32 over BBSW on the 1.54-year A$350 million piece and 39 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 21 plus BBSW.
