The securitisation market has had an above-average year, with new asset classes emerging and diversity among both issuers and investors increasing – while seasoned players are raising billions in record time.
This was one theme to emerge on day one of the Australian Securitisation Forum.
According to Stephen McCabe, a director in the securitisation, capital markets and advisory at National Australia Bank, asset backed securities issuance to date is "somewhere north of $7 billion", with non-RMBS issuers accounting for 17 per cent by volume and 30 per cent by deal number.
The deal flow has been boosted by both fintechs and established non-ADI lenders. NAB, not to be outdone by the minnows in the field has itself so far this year issued around A$1.4 billion in RMBS notes.
"Non-bank issuers have dominated the ABS pipeline, issuing all the way down the capital structure," said McCabe, who was moderator for a panel discussion on diversity of collateral.
Pepper treasurer Anthony Moir, a panellist, said his company had been a very active issuer with five public securitisation transactions to date this calendar year alone. Pepper, which is now in the market with its six securitisation, has issued both prime and non-conforming residential mortgage backed securities and also has an asset backed program.
Moir said the markets had been "very accommodating", as a higher number of investors participated in Pepper's prime program.
This year a wider range of securitisation collateral pools has emerged.
"One thing I've noticed this year is that, even in mortgages, we're seeing collateral such as SMSF loans, and non-residential lending, McCabe said.
"We are also seeing a big increase in the non-traditional ABS classes – like consumer and SME [loans], and very much a dip in the traditional auto space."
Moir countered with the suggestion he expected car loans and the subsequent securitisation deals were going to be a big benefit to the non-bank sector. "We'll see that market increase significantly year," he said.
Bianca Spata, group treasurer at non-bank lender humm, has been having an active year in the securitisation markets. "So far this year we've clocked over $1.4 billion in issuance which is material for us – that's our credit card book in New Zealand and our BNPL book in Australia and also our commercial loans book in Australia," she said.
Spata added that familiarity with the humm brand and the buy now pay later asset class among investors in the Australian ABS market made for an easier conversation than with offshore investors. "We are nowhere near saturation when it comes to [issuance in] the BNPL space," she said.
While the mainstays of the ABS market have been mortgages and car loans, Spata suggested that the unsecured part of the market is getting more attention from investors.
"Issuers in the unsecured feel that most investors start their journey in secured lending, typically on those mortgage deals," she said.
"Now there's an easier transition across to the unsecured asset space – whether that be personal loan transactions, credit cards or BNPL."
She suggested a couple of factors would support continued interest in unsecured