Macquarie reissues A$185 million of MBS paper

Issuer part-refinances deal launched in February 2000.

Macquarie Securitization Ltd, Australia's largest issuer of mortgage-backed securities (MBS), yesterday reissued A$185 million ($109 million) of bonds from its PUMA Masterfund programme. Macquarie Debt Markets and Deutsche Bank acted as joint lead managers.

The bonds were originally issued as three year fixed rate notes with a soft bullet payment as part of the A$750 million PUMA Masterfund P7 deal, which closed in February 2000. The bonds were scheduled to mature this week, but have been refinanced because the Trust did not have sufficient principal captured to repay the full amount due.

According to a banker involved on the deal, this does not represent a shortfall in funds, and investors expected this eventuality when the transaction was launched. Previous PUMA deals have also refinanced soft bullet tranches in the same manner.

The reissued notes have been repackaged as floating rate notes, which have expected average lives of 0.7 years. Both Moody's and S&P reaffirmed their original triple-A ratings for the bonds.

Although the joint leads initially marketed the deal in the 23bp-26bp over BBSW range, strong demand saw the final pricing tighten to 22bp. Market participants will hope that the narrowing of spreads will be reflected throughout the Aussie securitization market in the months ahead, following the unprecedented widening that affected deals late last year. But with new issuance so scarce in the early part of 2003, it is too early to make any conclusions about general price trends.

Around a dozen investors bought the reissued notes.

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