Asset-backed issuance growing

The subdued market for mortgage-backed securities will see its second transaction of the year this week, with ME Bank marketing what will be the second issue of the year.

Late last week Fitch Ratings issued a rating on an issue planned at A$600 million that was sold through SMHL Securitisation Fund 2011-1.

The Australian Office of Financial Management will be an investor in the bonds. ME Bank undertook three RMBS deals last year, all supported by the AOFM.

Westpac is the only other funder to sell RMBS this year, issuing $1 billion of bonds.

In a different asset class, Macquarie Leasing's second asset-backed issuance in the US private placement market generated a strong response last week, allowing the bank to upsize the sale by 50 per cent.

Macquarie sold US$842 million of securities, of which pricing terms were disclosed on US$750 million of bonds.

Meanwhile, Canadian bank CIBC's move to issue covered bonds in Australian dollars, despite uncertainty over demand, yielded good results, with the issue being over-subscribed.

CIBC sold A$700 million of 2016 bonds at 74 basis points over swap, which was in line with indicative pricing.

In the corporate bond market, Australian Unity increased the size of its planned retail bond issue to A$100 million, from A$80 million, and set the margin on the bond at 3.55 percentage points above the three-month bank bill rate, or five basis points more than the pricing flagged a week ago.

Bendigo and Adelaide Bank finalised terms for its sale of unsecured debentures, raising $90.5 million in fixed-term bonds. It confirmed the spread at 140 basis points over the 90-day bill rate.

This amount might be a disappointment to the bank, given the initial marketing allowed for the sale of up to $250 million in bonds.