IFR Asia – February 10, 2018

raised only D184.8bn for the
government, with only 0.36% of
the capital sold instead of the
12.8% on offer.
On the other hand, PV
Power’s D7trn and PV Oil’s
D4.1trn IPOs garnered strong
responses, despite being priced
at respective P/E multiples of 25
and 20. Regionally, oil marketing
companies trade at P/Es of 10–
and power companies at 10–12.
“The power and oil
distribution companies were
marketed as consumer plays and
managed to sail through,” said
an ECM banker away from the
deals.
The Vincom Retail block
also did well, despite the global
market turmoil last Monday.
Around 94.5m shares were
sold at the bottom of D47,750–
D49,500 range, or a 6.9%
discount to the pre-deal spot.
Books were covered with
participation from sovereign
wealth funds, long-only
institutions and hedge funds.
Credit Suisse, Citigroup and
Deutsche Bank were the joint
bookrunners. Maybank was co-
manager. „

NAB prints first Green RMBS

„ Structured Finance Asia Pacific’s first Green RMBS prices in line with standard tranche

BY JOHN WEAVERS

NATIONAL AUSTRALIA BANK reopened

the domestic securitisation

market last Thursday with a

self-led A$2bn (US$1.56bn)

RMBS offering, which was also

the first from Asia Pacific to

include a green tranche.

The innovative trade, via

National RMBS 2018-1, is the

latest sign of growing demand

for environmentally responsible

investments in Australia and

adds another feather to the

cap of NAB, the market leader

in Australian Green bond

issuance.

The A$300m Class A1G

notes, expected to be certified

as climate bonds under the

Climate Bonds Initiative

standards, priced in line with

the standard A$1.54bn Class

A1As.

The A1G notes are backed

against a mortgage pool that

satisfies the CBI’s July 2017

low-carbon building guidance

for Australian residential

properties.

This covers energy-efficient

homes built after 2005 in three

states – New South Wales,

Victoria and Tasmania.

Bankers away from the trade

welcomed the development,

but some expressed concerns

about the structure’s rather

loose criteria.

“There is no correlation

between cash flows on the

green loans in the mortgage

pool and the repayment of the

Green bonds,” said one DCM

manager.

“As a result, if the mortgage

loans backing the Green bonds,

which rank pari passu with

the standard Class A1As, are all

paid off early and/or mortgage

borrowers switch to new

lenders, Green bondholders

could be left holding notes

with no Green loans in the

underlying mortgage pool.”

In response, NAB told IFR

that the green mortgage pool

backing the A1Gs is A$474m, or

1.6 times the A$300m tranche,

“ensuring a conservative buffer

in the event of asymmetrical

Conditional Prepayment Rate

performance of the green and

non-green mortgages ... to give

us comfort we will be able to

satisfy the use-of-proceeds test”.

The green tranche was 1.

times oversubscribed and

predominantly sold to domestic

accounts. Real money took 82%

and bank balance sheets 18%,

with 81.2% allocated to so-called

dark green and light green

investors.

For the overall trade,

Australian investors bought

63% and offshore 37% with

real money and balance

sheet taking 56% and 44%,

respectively. There were 51

investors in the final book,

including 17 from overseas.

STANDARD PRICING

The only previous green asset-

backed securities issued in

Australia were much smaller

offerings originated by

consumer-finance specialist

FlexiGroup.

The A$50m A2G notes

within Flexi ABS Trust 2016-

and A$50m Class A2Gs within

Flexi ABS Trust 2017-1 priced

5bp and 3bp tighter than the

standard tranches, respectively.

As a result, Flexigroup

managed to achieve the “holy

grail” of the green market,

convincing investors to accept

lower yields over conventional

notes.

Such “good-cause” premiums

could trigger a rush of Green

offerings from issuers that have

so far baulked at the higher

documentation costs involved.

The FlexiGroup result stood

out, however, both in national

and international terms.

All senior unsecured

Australian dollar Green bonds,

like the NAB RMBS, have priced

in line with standard curves.

Furthermore, the only other

Green RMBS issuer globally,

Dutch mortgage lender Obvion,

paid slightly higher spreads

over standard RMBS for its two

trades in 2016 and 2017, both

targeted exclusively at green

investors.

MAJOR BANK COMPS

Both flavours of NAB’s A

notes, with weighted-average

lives of 3.0 years, came at the

tight end of final guidance of

one-month BBSW plus 85bp–

88bp, refined from initial 88bp

area talk.

Pricing of the new NAB

A1 notes compares with the

90bp margin CBA paid for

the A1 notes at the previous

major bank RMBS issued on

November 17, the A$2.65bn

Medallion Trust Series 2017-2.

The Medallion A1s had a longer

WAL of 3.5 years.

The National RMBS 2018-

A$70m Class A2s, A$46m Class

Bs, A$16m Class Cs, A$14m

Class Ds and A$8m Class Es,

all with 5.7-year WALs, priced

120bp, 170bp, 220bp, 320bp

and 445bp wide of one-month

BBSW, respectively.

Thanks to large

oversubscriptions, ranging

from 2.5 times for the Class

Es to 6.3 times for the Class

Cs, NAB was able to price the

notes 10bp–15bp inside both

initial guidance and the CBA

Medallion 2017-2 Class A2s, Bs,

Cs, Ds and Es.

These Medallion notes, all

with 6.2-year WALs, priced

135bp, 185bp, 235bp, 335bp

and 455bp over one-month

BBSW, respectively.

The National RMBS 2018-

A$6m Class Fs priced 575bp

wide of one-month BBSW,

matching the CBA Medallion

Class F spread. „

International Financing Review Asia February 10 2018 9

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shareholders with the balance
of around 56%.
Ezion told local media that,
once the restructuring was
completed, its overall debt
would drop about 40%, based on
full conversion of debt to equity.
According to its statement to
the exchange, the warrants,
when exercised in full, could
raise new funds of up to
S$530.5m (US$400m).
Ezion also said all
stakeholders would not suffer
haircuts.
“This is a very smart plan
by the company to get all
debt converted into shares
and warrants,” said one credit
analyst. “It does not need to
come out with cash and, as the
creditors are nominally swapped
into shares, there are no
haircuts, which optically looks
good, but bondholders receive
far lower coupons of 0.25% in the
CBs, compared with the coupons
of 4.5% to 7% they received prior
to restructuring.” „ Follow IFR Asia @IFRAsia