The A$500 million ($426 million) deal is the smallest Puma issuance since the mid-1990s and is priced at 40 basis points over the Aussie interbank rate û more than double the spread of Macquarie's previous deal, which launched in June at just 20bp.
Puma is one of the most frequent issuers in the Australian mortgage securitisation market, alongside St George Bank and Rams. All three are dependent on the short-term commercial paper and securitisation markets for their funding, which worked well until the collapse of the subprime market in the US closed the commercial paper market. Securitisation, although more expensive, is now the only real funding option left open.
Even so, widespread risk aversion means investors are only interested in buying the least risky mortgage pools. The Puma deal comprises full-documentation loans to prime borrowers with 100% mortgage insurance. On average, the loans are 20 months old and worth 67% of the value of the property they are secured by. None of the loans are worth more than 90%.
"This Puma bond issue demonstrates that there continues to be demand from investors for Australian residential mortgage backed securities from quality issuers with strong servicing and arrears performance," says Tony Gill, Macquarie's head of banking and securitisation. "We expect this will inspire other issuers to follow our lead and provide further momentum to the market."
The offering comprises A$485 million of triple-A notes supported by a A$15 million double-A subordinated tranche, which represents a 3% subordination. The top-rated notes carry a weighted average life of 2.8 years and 5.5 years for the junior notes, which are priced at 82bp.
SociTtT GTnTrale, Deutsche Bank and Macquarie Bank were joint lead managers and bookrunners for the issue. According to the leads, a broad number of Australian and Asian accounts bought the deal.