Australian Fund Managers Seek To Meet Demand For Commercial Loans
May 07 2012 - 3:18AM
Dow Jones News
Australia's fund managers are stepping in to meet the growing
demand for commercial loans left by the deleveraging of the banking
sector.
Specialist loan fund manager Metrics Credit Partners has
partnered with National Australia Bank (NAB.AU) to create a fund to
tap the growing appetite for fixed yielding assets among
Australia's 1.4 trillion ($1.42 trillion) Australian dollar
superannuation industry.
Metrics Executive Director Graham MacNamara said the fund, which
is expected to raise A$3 billion by the end of 2012--half of which
will come from NAB--hopes to cash in on the funding gap left as
Australia's banks rein in their lending and Europe's embattled
lenders retreat to their home markets.
"Heading into the Basel III environment will again increase the
pressure on the banks in terms of the kind of assets they can have
on their balance sheet," he said. "European banks withdrew about
A$15 billion from the (Australian) market in the last quarter. The
withdrawal of that much capacity has to be found from somewhere
else."
Metrics will own and service the loans, but sell units in the
fund to investors such as pension funds, giving them access to a
fixed income stream without having to shoulder the risks of owning
the underlying assets.
MacNamara said the funds loan portfolio currently yields 200 to
500 basis points and he expects "loan margins to remain at these
levels" for the foreseeable future. "If we're successful I think
you'll see some other banks looking to do the same thing," he
added.
Australia's major four banks----Australia and New Zealand
Banking Group Ltd (ANZ.AU), Commonwealth Bank of Australia
(CBA.AU), Westpac Banking Corp. (WBC.AU) and NAB--control around
60% of the country's syndicated corporate loan market, according to
data from Dealogic.
Steve Lambert, NAB's executive general manager for Capital
Markets, said the banks could raise between A$20 billion and A$25
billion a year by 2015 by selling off their syndicated loans.
"NAB is doing this to help address the problem we're facing," he
said. "We're not necessarily as efficient a place to hold long-term
debt as the super funds."
The void left by the banks' deleveraging has also created
opportunities in property loans for fund managers.
Quadrant Real Estate Advisors estimates the exodus of the
European banks from Australia's commercial property sector will
create a A$12 billion borrowing squeeze over the next two years.
Asset managers like Perpetual Ltd. (PPT.AU) and Challenger Limited
(CGF.AU) are expanding their property debt portfolios this year in
a bid to cash in on the high margins in the capital-hungry
sector.
-By Caroline Henshaw, Dow Jones Newswires; 61-2-8272-4689;
caroline.henshaw@dowjones.com
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