Monday, March 22, 2010

New Mixed-Pool Australian RMBS Places in Private Market

Original posted on the Housing Wire by Austin Kilgore:

Macquarie Securitization Limited, the securities division of Sydney, Australia-based investment bank Macquarie Group, announced Friday the private placement of a residential mortgage-backed security (RMBS) worth A$1.2bn (US$1.1bn) in an indication of growing appetite for non-public offerings Down Under.

Macquarie said 46% of the loans in the security were originated with the borrower claiming income but without bank verification, while the remaining 54% of the loans are fully verified originations. PUMA Master Fund S-8, is the first issuance for Macquarie since July 2008, when it issued an A$700m RMBS. Standard & Poor’s (S&P) rated both the A$119.8m in Class A-1 senior notes and A$898.7m in Class A-2 senior notes triple-A.

The Class A-2 notes are projected to yield 1.65% over the one-month Bank Bill Swap Reference (BBSW) rate, Australian’s central bank base rate. The ratings for additional classes of subordinate notes were not disclosed.

Macquarie said the transaction is a restructure of an existing mortgage warehouse facility into the privately placed securities. The notes cannot be offered or sold in the U.S. and Macquarie has no plans to put the notes up for sale in a public offering. But the Australian deal is a sign of a very different investment climate compared to the U.S., where underwriting standards have stiffened, the origination market is almost exclusively fully documented, fixed-rate mortgages and the Treasury’s $1.25trn MBS purchase program makes it the dominant investor in the market, for the time being.

Australian’s government had its own A$16bn MBS purchase program, split into two $8bn purchases. The first half of those securities could only contain 10% low documentation mortgages. So while non-government RMBS investors are returning, the private nature of the issuance may not reflect the broader appetite for lower quality mortgage pools.

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