Asset-backed securitisations have been on a steep issuance curve since markets were freed up post-Covid, and there is more to come. This was the message being told across a range of panel discussions on Day 1 of this year's Australian Securitisation Forum conference in Sydney.
Peter Riedel chief financial officer at Liberty suggested that securitisations may not have reached the zenith of funding for non-bank lenders. He was speaking on a panel on the state of the market in 2024.
"All loans since the GFC have all performed really well," he said.
He also asserted that investors are very comfortable with the collateral backing Australian securitisations. He added that total securitisations hit $59 billion of this year, up from $41 billion last year.
"My understanding is that allocation of fixed income is increasing. In future there is no reason why [Australian non-bank lenders] won't be able to issue $100 billion [total annual ABS]."
Stephen Mixter, group treasurer, Angle Auto Finance, agreed: "The market [issuance] doubled over 2023 [levels]. The Australian auto ABS market is now the third largest in the world, behind the US and Germany."
By way of example he noted that his company has raised more than $2 billion for two Panorama deals, attracting 43 investors from "all over the globe" suggested there is more work to be done with domestic investors.
He added that investors are saying they need time to change mandates from RMBS deals to include Australian ABS.
He pointed out that "ABS does pay down a lot quicker, so investors get their capital back sooner to reinvest [and] nearly 50 per cent of our book is novated leases, so we're getting payments straight out of payslips."
Sitting with Riedel and Mixter was Charlene Braytenbach, manager of debt and capital markets for ING Bank Australia. She added that this year her bank had a successful deal for 3-year unsecured bonds, which raised $1.25 billion and a $1.5 billion IDOL RMBS deal – both in May 2024.
Yhe bond attracted 100 potential investors and was oversubscribed to $3bn, whereas the RMBS notes attracted 20 investors.
Braytenbach moved on to say that this year, ING's arrears stats were 0.6 per cent (30 days) and 0.30 per cent (90 days), compared to the industry stats for the same period: 1.0 and 0.6 per cent, respectively.
In a later buy-side panel discussion some of these points were reiterated by Tim Stalker director, credit relative value, at Westpac Institutional Bank. "Auto ABS has a shorter [weighted average life] and therefore there is less prepayment risk, so we've been tilting investments towards that segment," he said.
Stalker – referring to transactions in 2021, when Allied Credit acquired Macquarie Bank’s auto dealer finance business, and Westpac sold its auto finance business to Angle Auto Finance – asserted that this was a positive aspect as the pools were being managed by specialists.