Overview
Since the first securitisations in Australia in the mid-1980s, the local securitisation market has seen rapid growth in the volume of domestic and cross-border issuance and a steady broadening of the range of asset classes which have been securitised. Both the domestic and international financial markets have grown in sophistication and become more familiar with Australian issuers. Globally, securitisation has been recognised as a mainstream alternative to other debt funding structures. For Australian issuers, residential mortgage-backed securities (RMBS) are still the dominant asset class but originators with other strong cashflow-generating assets or with sustainable market value-based asset pools are increasingly turning to securitisation.
This has resulted in a greater diversification in asset classes that support Australian and cross-border securitisations. Securitisation techniques have been applied in the funding of major projects, whole business financings, property developments, various financial assets and a range of receivables generated in the pub/leisure, leasing and small to medium-sized business sectors.
The advantages of securitisation are well known, including the ability to provide ready access to funding at lower pricing and from a diverse investor base. These factors have led to significant liquidity, innovation and product development in the Australian securitisation market. More recently, both the Australian domestic and cross-border securitisation markets have seen the rise of synthetic securitisation and the development of structured credit products such as CDOs, CPPIs and CLOs.