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A rollercoaster week has seen international share markets stumble and then stagger to their feet in the wake of a battered US sub-prime sector.
The impact of market uncertainty remains a fundamental concern for Australia’s lenders.
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While lenders sourcing extendible commercial paper from the States have been hardest hit, those that secure funds via securitisation are rightly worried about how tightening liquidity may increase the cost of securing funds.
“Debt capital markets globally are adjusting to short-term market turbulence,” points out John Empey, CEO at non-conforming lender Pepper Homeloans.
According to Empey it’s still too early to call whether Australian lenders are going to see a dramatic cost in raising capital through securitisation.
“It’s impossible to predict at the moment what levels the markets will settle at,” he told Mortgage Business this morning.
Jon Denovan, a partner with Gadens Lawyers, concurs with Empey.
“No one foresaw the collapse and flow on effects of the US sub-prime market, and I doubt anyone could foretell what will happen in the future,” he says.
In terms of any fallout from the sub-prime woes, Denvon says there have been some “diametric” views.
Denovan, an industry veteran who has witnessed three or four similar shakeups, believes that normality will return and the market will bounce back.
“Australia has one of the lowest default rates in the world; with good credit ratings as well as a stable political, economical and commercial environment,” he says.
“We’re an attractive target for those looking to conduct business through securitisation.”
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