Macquarie's September $500 million RMBS PUMA bond issue may have seemed like small fry compared to the deals done prior to the August US sub-prime crisis, but it marked a significant step forward for Australian securitisation according to the investment bank.
Despite low mortgage default rates and a non-conforming sector that makes up a mere fraction of mortgage lending in Australia, investors lost their appetite for RMBS in the aftermath of the US sub-prime malaise — a trend Macquarie was determined to turn around.
"Macquarie set itself a goal with this bond issue to try to get the market re-started, proving that there is still demand for quality issuers," said Kevin Stephenson, head of global treasury at Macquarie Bank.
Stephenson said the price of the issue reflected investor needs as the global credit markets adjusted following the liquidity crunch. The issue was comprised of full doc loans, heightening investor confidence.
"The pricing was a fair indication of where the market is up to. We were able to increase the value of the initial bond, which has given us every confidence for accessing the global markets in the future," Stephenson said.
With investor interest warming, the industry may now see other smaller issues successfully priced. Stephenson said it was simply a matter of listening and responding to the market.
"We aren't expecting to see past prices. The key is to listen to what investors are looking for."