A recent regulatory proposal from the Australian Prudential Regulation Authority could ease securitisation issuance based on master trust structures in Australia, according to a report from Standard & Poor's Ratings Services published yesterday. Among the proposed changes to Prudential Standard APS 120 were the intention to to allow early amortisation provisions and date-based calls.  In its report, Standard & Poor's disclosed that its approach to rating MTS, if these incorporated APRA's proposed changes in its draft  APS 120 "does not materially" vary from traditional series-segregated residential mortgage-backed securities. However, there are specific credit and liquidity considerations that are somewhat unique to MTS. Some of the points made by S & P were: the assessment of asset credit risk and the ability of those assets to make timely repayment of note interest and principal essentially follow the same process as series-segregated RMBS structures; however, the more intricate liability profiles of MTS tend to increase the complexity of cash flow analysis compared with a standard Australian RMBS with a fixed liability profile; depending on the size of the bullet notes and the maturity profile of other rated notes, a significant level of principal receipts may be required to address the liquidity risk inherent in these structures depending on the size of the bullet tranches relative to the overall capital structure; Australian RMBS transactions to date that have incorporated hard-bullet tranches are usually dependent on a bank for redemption, with the rating of the hard-bullet tranche usually capped at the rating of the redemption-facility provider; alternatively, some transactions rely on the accumulation of principal collections within the transaction structure to facilitate repayment on the hard-bullet tranche, however, this usually results in a hard-bullet tranche that is a relatively small percentage of the total mortgage pool size; the issuance of MTS in Australia to date has been limited (while the incorporation of bullet features in more traditional RMBS structures has increased in recent years, the total volume of bullet-payment notes issued remains low); meanwhile, Australian covered bonds have substantially increased the supply of bullet-payment bonds funding Australian residential mortgages; but only the major banks and Suncorp Metway (and more recently Macquarie) have tapped the covered bond market to date -  MTS may offer opportunities for other lenders to further incorporate bullet features into their transaction structures. "Whether MTS are successfully implemented may depend on final regulatory settings and ensuing operational rules and guidelines," S&P concluded.