Australia is Asia-Pacific Region's Most Active Market.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

Nov. 30, 2000-- Although it remains a fairly conservative arena, Australia continues to be the Australasia region's most active market, as well as its oldest, according to Fabienne Michaux, director of Standard & Poor's Asia Structured Finance Ratings group in Melbourne.

As in the past, residential mortgages continued to dominate the issuance pipeline 2000, but there has also been significant activity in other areas, notably the asset-backed commercial paper (ABCP) sector.

And while term ABS have been limited, it is encouraging to note that the diversified asset types finding their way into ABCP conduits are expanding to include small business loans, margin loans, and auto and equipment contracts, along with the traditional trade receivables pools, residential mortgages and repackaged RMBS, and corporate loans and bonds. While only one CMBS transaction closed through the mid-third quarter 2000, several others are in the pipeline and at least one is expected to close before year-end.

But Australia is a relatively small country so its limited population, combined with its isolation from other capital markets, has encouraged it to move in new directions in recent years. It seems that some Aussie issuers will be stepping into the U.S. market, a trend that is already emerging, with four of the seven offshore issues tapping into the U.S. markets, as of the mid-fourth quarter 2000, through global offerings. What is more, there are many more issues expected over the coming year.

"The main reason we haven't seen more offshore issues this year is the spreads on the cross-currency swaps," Ms. Michaux said. "And, for the smaller issuers and those with limited balance sheet or warehouse capacity, the weakening performance of the Australian dollar against the U.S. dollar means that significantly more Australian dollar-denominated assets are needed to support U.S. dollar offerings."

Concurrently, domestic investors are becoming willing to move down the credit spectrum to securitizations rated as low as 'BBB', and they are branching out into securities backed by consumer assets, including retail credit cards and auto loans, as well as commercial mortgages. Also, at the short end, Standard & Poor's is seeing more 'A-2' rated conduits coming to market. Furthermore, in the past year, the first 'A-3' rated conduit was launched by ANZ Investment Bank. As investors begin to take on additional risk, their internal organizations are changing as they hire credit analysts to focus specifically on structured finance paper.

This information is contained in an expansive overview of the global structured finance markets recently published by Standard & Poor's, titled "The Expanding Universe of Securitization." It encompasses close examinations of the ABS, CMBS, and RMBS markets in Europe; Australia, Japan, and other Asia-Pacific countries, and Latin America, and includes interviews with key Standard & Poor's executives active in these regions, as well as notable market players.

For a copy of this article, please contact Lisa Tibbitts, Media Relations manager, in Standard & Poor's Communications group, at 212/438-7530.

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