Australia mortgage defaults trigger repayment limits for Suncorp bond

老衲

SYDNEY, March 5 (Reuters) - High defaults in residential mortgages backing securitised bonds sold by Australia's Suncorp Group SUN.AX have triggered a clause that limits principal repayments for some investors, the manager of the bonds has told investors.

The unusual trigger is the earliest signal of the impact the country's sharpest property downturn in a generation is having on the country's A$1.8 trillion ($1.27 trillion) mortgage pool. Ratings agency S&P Global (NYSE:SPGI) has warned that weaker economic conditions will put pressure on arrears and repayment rates.

Notifying Suncorp bondholders of the trigger, the manager SME Management Pty said it would prioritise principal repayments to the holders of the two senior tranches of the bond - Class A2 and Class AB - ahead of Class B noteholders.

According to Suncorp's bond documents, loan arrears must be less than 3 percent in each of the prior 12 months in order to allow principal repayments to all investors on a pro-rata basis.

But the clause was triggered since more than 3 percent of the loans backing Suncorp's 2010 securitised bond were over 60 days overdue, the manager said. This compares with a rate of 1.3 percent for Suncorp's own mortgage book.

While the clause is standard for securitised bonds, it is unusual for it to be triggered as the 3 percent cut-off is much higher than that of the overall industry.

For the Suncorp bond issue in question, A$120 million is outstanding to the three classes of investors - A2, AB and the Class B noteholders.

Under the clause, Class B noteholders will only receive principal distributions for the month of March after all payments have been made on higher-rated debt.

Once the outstanding amount to be paid drops below about A$100 million, Suncorp has a standard option to call in the bonds and close the trust it set up to issue them in 2010.

"All holders are expected to receive the full principal amount once the trust is called," a Suncorp spokesman said.

S&P Global, however, has said that borrowers' debt serviceability could be hurt due to softening macroeconomic conditions. "Declining property prices pose more of a risk for junior tranches of residential mortgage backed securities transactions," it added.

Australia's GDP data, to be released on Wednesday, is likely to show domestic momentum almost stalled last quarter. ($1 = 1.4128 Australian dollars)

老衲

要降息了

tasl

Who is going to be afFected, suncorp bond holders?

gcc

买了 Suncorp bond 的投资者会受影响，尤其是相对低级的B债券。

一般情况下，A2, AB 和B的持有人，每期都是按照比例拿回本金，但是现在由于房市衰退，欠款率已经超过了3%，所以低级的 B 持有人，就不会被付本金。这个条款，其实目的是保护高级别的持有人，降低他们的风险。

当然，B 持有人的风险，也不是白担的，他们的 利息要比高级别的高，来 compensate 他们的风险。

目前整个资金池还有120m ，一旦当整个资金池下降到100m 的时候，suncorp 就可以 call 这个 deal, 就是一笔还清所有投资者。

一般是当剩余资金为原始 Deal 的 10% 的时候，所以我估计这个 deal 最开始是1bil.

iamyi

降息会有用？都是借新债还旧债，差的是那点利息的差额？差的是借不出来新债

nkzealot

suncorp房贷利率那么低，看来是有联系的。