Moody's Sees Tough Times Ahead for Australian MBS

Moody's Investors Services said its negative outlook for Australian residential and commercial mortgage-backed securities and asset-backed securities could persist for another 12 to 18 months. "Although there is no immediate short-term unease with regard to the performance of RMBS collateral, Moody's is nevertheless concerned with the situation over the next 12 to 18 months, as expectations of increased unemployment and an uncertain global economic climate filter through the Australian economy," said Richard Lorenzo, a Moody's vice president and senior analyst. In the CMBS market, "On the supply side, institutional property owners are looking to delever their balance sheets by unloading noncore assets and thus providing a supply overhang in the market," Moody's said. "On the demand side, property investors are facing hurdles in obtaining debt funding from banks which are weary of overexposing themselves to the commercial real estate sector."