AUSTRALIA'S CBA INNOVATES


Commonwealth Bank of Australia (CBA), one of the country's four major domestic banks, claimed to have become the first in the local market to securitize domestic and offshore credit exposures through the issue of credit-linked notes.

The bank entered into a credit swap with its Medallion Trust special purpose vehicle covering exposures totaling A$1.5 billion. Medallion financed the swap with a A$180 million issue of credit-linked notes, the proceeds of which will be invested in government-guaranteed assets.

According to CBA, the deal represented a "major advance" on corporate loan obligation securitizations as the credit swap covered "all types of exposure, not just cash advances." The transaction also allowed for other "corporate reference entities" to be substituted into the portfolio.

Meanwhile, Resimac, a mortgage-lending business based in New South Wales and owned partly by the state government, became the latest Australian securitizer in the Euro-denominated market with a E175 million transaction led by SG Australia. The company is also expected to issue A$234 million of senior debt and A$14 million of subordinated paper in the domestic market shortly.

Roger Hogan