Aussie ABS reopens after record 2024The booming Australian structured finance market reopened on Thursday with a well-received auto ABS from Plenti Finance as one non-major bank and four non-bank lenders prepare mortgage-backed offerings. While there has been no repeat of 2024’s dramatic start, when Westpac set an early benchmark via a A$2.75bn (US$1.7bn) RMBS print, confidence is high among investors, issuers and analysts for another strong year. Public supply in 2024 reached A$80bn from 100 transactions involving 57 issuers, according to Westpac, eclipsing 2023’s post-financial crisis high of A$52.3bn and the A$64bn record in 2006. Securitisations benefited, alongside other credit markets, from local funds switching more resources into fixed-income assets and Asian investors seeking alternatives to the shrunken Chinese Reg S bond market. Some participants at the ASF Securitisation Conference in December suggested a A$100bn-year will be achievable, while Martin Jacques, head of securitisation and covered bond strategy at Westpac, expects 2025 public supply in the A$62bn–$75bn range, if certain assumptions hold. They include ongoing growth and diversification by non-bank lenders into non-mortgage financing, relatively strong bank supply, tempered by cheaper competing funding options, and expanding appetite for ABS among domestic and global investors. Two potential flies in the ointment cited by analysts are a significant increase in domestic unemployment and/or unforeseen global macro events or crises, though some doubt the latter would deliver a substantial lasting blow to the market. "The Australian structured finance market has proved very robust for a long time and the strength of investor demand for this [Plenti auto ABS] deal, during a volatile week in global macro terms, is testament to investors’ underlying confidence in the asset class," said Miles Drury, chief financial officer at Plenti. "With global equity market valuations continuing to be stretched and strong system liquidity, there is attraction to a defensive asset class like Australian ABS which is offering attractive returns ranging from circa 5.5% for Triple A rated notes up to 8%–9% for sub-investment-grade tranches," he said. Plenti of demand Consumer lender Plenti had no problem executing its fifth auto ABS transaction, the no-grow A$509.3m Plenti Auto ABS 2025-1 Trust, whose junior tranches were placed before launch. Final cover was 3.7 times for the available A$264.5m of the A$410m Class A note, with a 1.6-year weighted-average life and 18% credit support, despite clearing at one-month BBSW plus 110bp, below 115bp–120bp area initial guidance. Drury said the largest Plenti ABS issue, under either its auto or personal and green loans programmes, drew record demand with new domestic and offshore investors participating. NAB was arranger and joint lead with Bank of America and Westpac for the transaction, which included A$9.3m of Class A-X notes that are repaid senior in the income waterfall, according to the amortisation schedule. The B1, C1, D, E and F notes, all with 2.3-year WALs and respective 10.50%, 7%, 5.75%, 3.50% and 1.50% credit enhancements, priced at 155bp, 170bp, 190bp, 380bp and 485bp over one-month BBSW. The first auto ABS of 2025 follows a record year for the sector in which auto and equipment-backed securitisations reached A$12bn, according to Westpac. Last year’s total includes the A$458m Plenti Auto ABS 2024-1 in May with clearing margins at 130bp, 205bp, 245bp, 500bp and 640bp for the respective A, C, D, E and F tranches. Those spreads are 20bp, 35bp, 55bp, 120bp and 155bp wider, respectively, than Plenti’s latest margins, though the former's WALs were longer at 1.8 years for the As and 2.7 years for the Cs, Ds, Es and Fs. The 2024-1 Class B1 notes priced 155bp wide of one-month BBSW, matching this year's spread. Demand for the Double A tranches, like the Plenti Class B1 notes, has been affected by investors looking to secu
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