(26 May 2011 – Australia) An Australian-based unit of Lloyds Banking Group plans to issue A$551.2 million in securitised small business and individual car loans.Lloyds unit, Capital Finance Australia is issuing a tranche of debt in pounds to lure British buyers, as local appetite for the financial instruments becomes stretched.
The deal marks the second offering not backed by home loans this year as the country’s securitisation market, continues to improve after a slump in the wake of the global financial crisis.
‘We haven’t gotten foreign buyers back into the market at this point,’ said Chris Dalton, chief executive of the Australian Securitisation Forum.
‘That’s our work in progress.’
A spokesman for Capital Finance said the cost of issuing one tranche in pounds would not be known until later this month. Total securitisation issuance to date is set to beat last year’s A$20 billion after a strong start to the year, while Capital Finance’s deal could bring year-to-date asset-backed securities, or ABS, issuance to A$1.4 billion, up from A$600 million at this point a year ago, according to Moody’s Investors Service.
A year ago, the same push for foreign investors played out with lender Members Equity and Macquarie Leasing, a unit of Macquarie Group, both pricing parts of deals in foreign currencies.
Securitisation catapulted in the second half of the year and spreads narrowed, which erased some of the need to issue in foreign currencies.
Book runners say attracting foreign investors is even more important since Commonwealth Bank of Australia priced A$3 billion in residential mortgage-backed securities early last month, sucking capital from local investors.