Australian RMBS issuance gets tougher as Fitch confirms LMI criteria
On August 10 Fitch Ratings (Fitch) changed its global criteria for lenders' mortgage insurance (LMI) within residential mortgage-backed securities (RMBS) transactions, with the rating agency expecting RMBS deal ratings in Australia to be the most adversely affected. The criteria confirm proposals made in an exposure draft announced by Fitch on May 17, and will require Australian and New Zealand RMBS issues to provide higher credit enhancement, beyond LMI and excess spread, to secure a Fitch rating.Pricing jags out but Australian majors resilient to turbulence for now
Although extreme volatility is keeping primary issuance on hold across all markets, intermediaries are optimistic that the current environment is unlikely to evolve into a similar liquidity crunch for banks as seen in 2008. And market participants point out that even if another funding squeeze was to occur the Australian banks are much better prepared to weather the storm this time round.
AUD hammered but emerging currencies predicted to rebound
The paradoxical reaction to the latest wave of European convulsions and the US downgrade – a flood of investment funds into US Treasuries, with a consequent redoubling of the downward pressure on equities and non-core currencies – could be short lived. Some global strategists expect emerging and commodity market currencies to rebound in time as the realisation sets in that global markets no longer offer a single currency, risk free return.CommBank emphasises conservative funding profile in results announcement
The bank's strong funding base and advance preparations for forthcoming Basel III regulations were a focus of Commonwealth Bank of Australia (CommBank)'s annual results presentation on August 10. While CommBank has seen a marginal reduction in the average tenor of its wholesale term debt and a slight increase in the proportion of wholesale funding sourced in short-term markets, these have been offset by deposit growth.