Australian Securitisation Journal Issue 17 (November 2019)

Markets blossom down under Emerging lenders are reaching scale and established players are growing their presence.

Antipodean markets are finally seeing long-promised growth and diversity.

Incorporating Australian and New Zealand Securitisation and Covered Bonds >> Issue 17 • 2020

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CONTENTS

2 FOREWORD 6 FEATURE 10 EVENT REPORT 18 Q&A 20 COMMENTARY 22 COMMENTARY 24 COMMENTARY 26 COMMENTARY 28 COMMENTARY 30 FEATURE 40 COMMENTARY 44 Q&A 46 EVENT REPORT 49 MEMBER PROFILES 57 ISSUER PROFILES

Chris Dalton, chief executive officer, Australian Securitisation Forum.

Incorporating Australian and New Zealand Securitisation and Covered Bonds >> Issue 17 • 2020

ASF MANAGEMENT COMMITTEE Chair Sarah Hofman Deputy Chairs Belinda Smith David Ziegler Treasurer Heather Baister Chief Executive Officer Chris Dalton asf@securitisation.com.au +61 2 8277 4141 www.securitisation.com.au

ASJ PUBLISHED BY

www.kanganews.com Chief Executive Samantha Swiss sswiss@kanganews.com Head of Content and Editor Laurence Davison ldavison@kanganews.com Senior Staff Writer Matthew Zaunmayr mzaunmayr@kanganews.com Staff Writer Chris Rich crich@kanganews.com Head of Commercial Jeremy Masters jmasters@kanganews.com Head of Operations Helen Craig hcraig@kanganews.com Sales Support Officer Yazzy McGuid ymcguid@kanganews.com Design Consultants Hobra Design www.hobradesign.com ISSN 1839-9886 (print) ISSN 2207-9025 (online) Printed in Australia by Spotpress.

© ASF 2019. REPRODUCTION OF THE

CONTENTS OF THIS MAGAZINE IN ANY FORM IS PROHIBITED WITHOUT THE PRIOR CONSENT OF THE COPYRIGHT HOLDER.

Australian Securitisation Forum New Zealand subcommittee members, Deemple Budhia and Simon O’Connell, reflect on another year of domestic development.

Assessing local market prospects at the KangaNews New Zealand Debt Capital Markets Summit.

Resimac’s Andrew Marsden discusses funding strategy, singlename limits in the securitisation market and global investor engagement.

As the Australian securitisation market expands, ANZ is seeing increasing opportunity in the mezzanine tranches.

Commonwealth Bank of Australia discusses the key considerations for the domestic market amid global moves toward alternate reference rates.

Westpac Institutional Bank explores the partnership opportunities beyond funding with fintech lenders.

Emerging lenders are reaching capitalmarkets scale. National Australia Bank expands on its facilitating role.

Ratings are crucial for public-market transactions. Moody’s Investors Service considers the opportunity set for new lenders.

A growing band of new names is considering public term securitisation. There is significant impetus for lenders to reach this point, and some are plotting an accelerated path to market.

New EU securitisation regulations came into effect at the beginning of 2019. Mayer Brown discusses the different routes to compliance for Australian borrowers.

Equity Trustees aims to provide tailored solutions to new clients and to offer them longstanding trust relationships.

Coverage from the fifth Australian Securitisation Forum Tokyo investor seminar.

Information on 31 Australian Securitisation Forum member organisations.

Issuance and programme details covering 34 Australian and New Zealand securitisation borrowers.

FOREWORD

FROM THE CHIEF EXECUTIVE

Welcome to the annual Australian Securitisation Forum (ASF) conference edition of ASJ.

CHRIS DALTON

CEO, AUSTRALIAN SECURITISATION FORUM

T

he ASF will reach a significant milestone in early 2020 when its governing body, the National Committee, holds its 300th meeting. This milestone marks the ASF’s pivotal role over the last three decades in representing the interests of the Australian and, more recently, the New Zealand securitisation markets.

The success and effectiveness of the ASF reflects the contribution of its members over many years to develop and improve the market as well as the collaborative spirit within the industry to adopt perspectives through the ASF, while at the same time building a competitive and dynamic market. We look forward to the next 30 years.

MARKET ACTIVITY Primary Australian securitisation market activity in 2019

has been strong, reaching A$30.4 billion (US$20.8 billion) at the end of September. This is A$7 billion more than the volume seen at the same time in 2018.

Residential mortgage-backed securities (RMBS) comprise the bulk of Australian issuance, at A$26.5 billion.

Authorised deposit-taking institution (ADI) originators have the lead in the volume of RMBS issued in 2019, a contrast with 2018 when full-year non-ADI issuance surpassed that of ADIs for the first time. However, non-ADI originators still dominate the nonconforming sector.

2 · Australian Securitisation Journal | Issue 17_2020

After a quiet start to the year, the nonmortgage asset-backed securities (ABS) market has seen increased activity in recent months with asset types including the more familiar auto loans and credit cards as well as new collateral providing diversification benefits and yield opportunities to investors.

The RMBS and ABS markets have both seen new entrants (see p30). These include Mortgage House with its first public RMBS, Zip Co with its first master-trust securitisation of buy-now, pay-later (BNPL) receivables and Wingate Consumer Finance with its first personal-loanbacked ABS transaction.

Columbus Capital’s Vermilion deal was also significant for the Australian securitisation market. It demonstrates increasing depth of investor appetite and risk tolerance given the pool was composed entirely of investor mortgages to offshore residents from 13 different countries.

The commercial mortgage-backed securities (CMBS) sector has only seen two transactions this year with Liberty Financial pricing an SME deal in early October and Think Tank pricing a new CMBS later in the month. This sector is expected to grow, though, with the introduction of the Australian Business Securitisation Fund (ABSF).

The new A$2 billion ABSF initiative has been established to assist SMEs access competitive finance and grow the ABS market’s capacity to fund small businesses.

The ABSF was implemented in July 2019. However, the ABSF’s administrator, the Australian Office of Financial Management (AOFM), is unlikely to call for proposals from SME lending-market participants until it has completed its resourcing needs, including the appointment of an investment manager, and also settled on a data-collection standard.

The New Zealand securitisation market has seen an uplift in issuance in 2019 with NZ$1.4 billion (US$895.3 million) placed across six transactions by the end of September (see p6 and p10). The majority of issuance has been in the auto- and credit-card-receivables ABS segments. However, the RMBS market has seen two transactions which is the most for a calendar year since the financial crisis. Issuers thus far in 2019 include flexigroup, Resimac, Avanti Finance, Motor Trade Finance and Eclipx Group.

The Reserve Bank of New Zealand (RBNZ)’s high-grade RMBS framework for New Zealand – the residential mortgage obligation (RMO) – is anticipated to have a positive effect on the future development of the securitisation market in New Zealand. The RBNZ’s final policy on the RMO is expected to be published by the end of 2019.

The issuance of covered bonds continues to feature in the annual funding plans of several ADIs. More than A$15.2 billion has been issued in various currencies so far in 2019, which is close to the volume achieved in 2018 though more skewed to offshore markets.

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FOREWORD REGULATORY AND POLICY MATTERS In 2019, the ASF’s subcommittees and working groups have been actively engaged in discussing and forming industry positions on several regulatory, policy and market matters that influence the efficient operation of the Australian and New Zealand securitisation markets.

These include ongoing discussions on the need for and merits of a simple, transparent and comparable (STC) framework for Australian securitisation, in light of the implementation of the EU’s simple, transparent and standardised framework and the introduction of Japan’s own STC regulation earlier in 2019.

The ASF has been instrumental in the process of engaging SME originators and investors with Treasury and the AOFM in relation to the ABSF legislation, its complementary investment-guiding principles and investigating the potential for data standardisation in the SME sector.

The ASF’s consultation on Australian interest-rate benchmark reform was released in early September to securitisation industry stakeholders locally and offshore.

The consultation, comprising an electronic questionnaire followed by a selection of qualitative interviews, is broadly focused on the longevity of the onemonth bank-bill swap rate for ABS and RMBS issuance, the adoption of more robust contractual fallback benchmarks and the challenges of using risk-free rates over interbank offered rates as alternate benchmarks.

The responses are in the process of being collated by the ASF’s consultant, PwC. The results will be presented for discussion at the ASF’s conference in November and incorporated in a formal report to be released later in 2019.

In addition to several submissions made on the RMO, the ASF has also worked closely with its New Zealand constituents on the RBNZ’s Phase 2 review – prudential supervision. They have successfully argued that the RBNZ’s prudential-supervision powers should be restricted to entities that take retail deposits and not capture wholesalefunded nonbank lenders.

ASF OUTREACH The ASF’s professional securitisation education programme is continuously under review and is presented by a panel of highly qualified industry experts. The following courses are available to members and nonmembers: • Securitisation Fundamentals (in Australia and New Zealand).

• Securitisation Professionals.

• Securitisation Applied.

• Securitisation Trust Management.

The fundamentals and professionals courses have each been offered on six occasions during the year. The fundamentals course has also been held in-house by several institutions which have incorporated it as part 4 · Australian Securitisation Journal | Issue 17_2020

of their induction programmes. The ASF continues to coordinate member events throughout the year which give participants an opportunity to interact with industry specialists and other members. In addition, the ASF is committed to promotional activities in Australasia and offshore.

In 2019, the ASF again held its annual London investor seminar in June followed by its participation at the global ABS conference in Barcelona. The ASF also held its fifth Japanese investor seminar at the Australian Embassy in Tokyo on 15 October (see p46). The success of this event is clearly demonstrated by the number of registrants, which reached 120.

Among those present were Tokyo-based investors SBI Sumishin Net Bank, Mitsubishi UFJ Kokusai Asset Management, Daiwa Next Bank, Norinchukin Bank, Shinsei Bank, Japan Post, Sumitomo Mitsui DS Asset Management, Tokyo Star Bank, Mitsui Sumitomo Primary Life Insurance, Nippon Wealth Life Insurance, AIG Asset Management, Sony Bank, Nomura Asset Management and a number of Japanese regional banks.

The Future Leaders and Young Professionals (FLYP) subcommittee has gained further momentum with its university outreach programme in 2019. FLYP has delivered 10 presentations to undergraduate and postgraduate business schools in Sydney, Melbourne and Brisbane this year. The feedback from lecturers and students has been extremely positive.

The ASF’s Women in Securitisation (WIS) initiative is now well-established within the industry and continues to enhance its yearly programme of events and career development programmes delivered across Sydney, Melbourne, Brisbane and Auckland. Interest in, and support of, WIS offerings by ASF members continues to rise, with some initiatives rapidly reaching capacity.

ASF membership has continued to grow, to a total of 138 Australasian market participants. We welcome the following new members which joined the ASF in 2019: Centum Capital, Copernican Securities, Defence Bank, Get Capital, Goldman Sachs, Judo Bank, Leasing and Finance, Merrill Lynch International, Mortgageport Management, MSC Trustees, Real Asset Management, RIO Capital Group, Scottish Pacific Business Finance, SG Fleet Group, Societe Generale Sydney Branch, Solutions2You, Standard Chartered Bank, TAO Solutions, Yilmaz Consulting and zipMoney.

Finally, the ASF wishes to thank Lynsey Jackson who leaves the ASF executive office in December 2019. Over the last five years, Lynsey has been instrumental in working with the ASF National Committee and its various subcommittees to execute and implement the objectives of the ASF. In particular, she has played a key role in the evolution of the ASF’s WIS and FLYP subcommittees. We wish Lynsey well in her relocation to Queensland. ■

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FEATURE

NEW ZEALAND SECURITISATION REVIEW AND PREVIEW New Zealand securitisation has continued its upward trajectory in 2019, according to Deemple Budhia, Simon O’Connell and Ling Yan Pang of the Australian Securitisation Forum (ASF)’s New Zealand subcommittee.

While 2017 and, to a lesser extent, 2018 were post-financial-crisis record years for term issuance in New Zealand, 2019 has materially surpassed both of them.

deals in the year, the second of which set a record for recent transactions after being upsized to NZ$300 million. This edged out Motor Trade Finance’s NZ$280 million Rambler transaction.

While all transactions were from repeat issuers, it has been pleasing to see a number of new investors, both domestic and offshore. In total, 18 investors participated across the six transactions, two of which were new to the New Zealand securitisation market.

Of the total issuance, 55 per cent by volume was placed domestically, 43 per cent into Australia and the balance further afield. Bank balance sheets took 22 per cent of volume with the rest purchased by real-money accounts.

Further enquiry has been received from investors that have previously not considered securitisation. This can be attributed largely to the product’s attractive risk-return profile and performance over the last 10 years, and the prospect of issuance of the Reserve Bank of New Zealand (RBNZ)’s residential mortgage obligation (RMO) securitised asset class in the near future.

In response to increased enquiry, the ASF has run a number of courses. These have been well attended by a variety of market participants including issuers, investors and government agencies.

Aside from capital-markets issuance, 2018-19 has seen a number of new warehouse facilities established by lenders in New Zealand and existing warehouses increased in size to a level that could permit bond issuance in the near future. New sponsors include Harmoney, Pepper, Bluestone, Prospa and CFML. All these new facilities bode well for the future publicissuance pipeline.

REGULATORY CHANGES

6 · Australian Securitisation Journal | Issue 17_2020

N EW ZEAL AN D SECURITISATION ISSUAN CE VOLUM E Eclipx

Flexigroup*

MTF

Resimac

Avanti

Latitude

1.600 1.400

200

1.200

250

1.000 VOLUME (NZ$M)

T

he 2019 record volume has coincided with the growth of nonbank lenders in the New Zealand market, including the return of some familiar names. Volume of issuance and number of issuers are clearly lower than Australia, but the six New Zealand transactions in 2019 – totalling NZ$1.4 billion (US$895.3 million) – marks a notable step forward.

The 2019 outcome marks a significant improvement on issuance to 2018 and is close to the aggregate issuance of NZ$1.5 billion for 2017-18 combined (see chart). All six transactions this year came from returning issuers, though.

Term issuance over recent years has been split almost equally between credit-card asset-backed securities (ABS), auto ABS and residential mortgage-backed securities (RMBS). This trend continued in 2019. It differs from Australia, where RMBS continues to be the dominant form of term issuance.

By far the largest issuer in 2019 has been flexigroup, through its Q Card Trust. It is the only issuer to bring two

There have also been important regulatory changes and proposed changes, particularly for banks, over the past few

800 600 400 200 0

280

250 220 200 209 224 2017

*Two deals in each of 2017 and 2019.

SOURCE: KANGANEWS 27 OCTOBER 2019

453

200 150 2018

250 2019 YTD

FEATURE

years – and these have buoyed nonbank lender interest in New Zealand securitisation.

Nonbank lenders have seen this as an opportunity to enter or grow their presence in the New Zealand market. One example has been the RBNZ’s review of the capital-adequacy framework for banks, which began in May 2017 and should be finalised by December 2019.

Among other changes, the RBNZ has signalled that there will be a material increase in the level of capital required to be held by banks – including up to 16 per cent tier-one capital – while existing risk weighting for different types of assets will be amended.

While the final outcome of the review is unknown, if the changes signalled by the RBNZ are implemented nonbank lenders may have new opportunities to grow their New Zealand businesses. Whether this view is correct and how it might develop is uncertain, but even very small changes within the banks could provide growth opportunities for the nonbank sector.

According to the reserve bank, aggregate housing loans funded by nonbank lenders increased by 50 per cent between August 2017 and August 2019. While the increase sounds impressive, at only NZ$2.9 billion this represents approximately 1.4 per cent of the total New Zealand mortgage lending market. By contrast, NZ$5.6 billion of the consumerfinance sector is funded by nonbank lenders representing approximately one-third of that market.

One the other side of the coin, like Australia, there has been increased focus on the conduct and culture of the financial-services sector. One output of this increased scrutiny is the Credit Contracts Legislation Amendment Bill, which proposes significant changes to New Zealand’s consumer-credit regime.

These include the imposition of a due-diligence duty on directors and senior managers to comply with the Credit Contracts and Consumer Finance Act 2003 – including the principles-based lender responsibilities. This will affect all lenders in the New Zealand market so is unlikely to shift the composition of lending activity. But it will increase the compliance burden on lenders.

The bill is currently anticipated to pass this year and come into effect from March 2020. It is one of a number of changes proposed by government, including a conduct-licensing regime for banks, insurers and nonbank deposit takers, and a review of the Reserve Bank of New Zealand Act 1989.

Taken together, these changes herald a period of significant regulatory transition and adaptation for lenders.

In addition to these, the revised financial-advisers regime was passed in April 2019 with key provisions coming into force from mid 2020.

RMO UPDATE Since 2017, the RBNZ has been consulting on the RMO standard. Based on the last consultation paper, issued in 8 · Australian Securitisation Journal | Issue 17_2020

November 2018, the RMO will essentially be a form of highgrade RMBS as it includes a prescriptive capital structure, eligibility criteria and portfolio limits to enhance the credit quality of the underlying pool.

The reserve bank’s view is that stricter criteria will result in a more marketable, high-quality instrument which may assist in developing a liquid market for these repo-eligible securities.

The RBNZ has been engaging with market participants to revise the RMO standard and the loan-level data template. The template is now substantively agreed. The final template will be published with the final RMO standard, which is expected to be by the end of this year.

How regularly banks will issue RMOs is an open question as there is currently no external RMBS issuance from the banks.

If the final standard includes a capital-relief option – as is the case in Australia – there would be an additional incentive, over and above being able to use the instrument for liquidity purposes, for banks regularly to issue RMO securities. This would follow the pattern established in Australia. However, the November 2018 consultation paper did not contemplate such an option.

In any event, RMO issuance by the banks will be significant for the New Zealand market and regular RMO supply should assist in further developing the New Zealand term-issuance market as a whole.

LOOKING AHEAD Since the financial crisis, the New Zealand securitisation market has been dominated by warehouse funding. This has again been the case in 2019, with a number of new and returning nonbank lenders establishing warehouse facilities.

As existing warehouse securitisations grow, the assets may contribute to future term issuance.

Given the rapid changes in regulatory landscape, the next 12 months is likely to present new opportunities in the securitisation space. Increasing the diversity of issuers may help overcome the sporadic nature of domestic deal flow to date, incentivising New Zealand and offshore investors to familiarise themselves with New Zealand securitisations.

Overall, the future is looking bright for the New Zealand securitisation industry. ■ New Zealand market subcommittee Simon O’Connell, Deemple Budhia and Ling Yan Pang are members of the New Zealand market subcommittee of the Australian Securitisation Forum. The subcommitee was established in 2015 with a view to establishing an advocacy group for securitisation in New Zealand.

The fundamental objectives of the subcommittee include education, networking, industry liaison and advocacy for securitisation as a debt capital markets tool. The subcommittee is chaired by Simon O’Connell and comprises market participants including issuers, arrangers, investors, lawyers and trustees.

Further information can be found at https://www.securitisation.com. au/whatwedo_newzealand_market.

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EVENT REPORT

The rubber hits the road in New Zealand The New Zealand securitisation market took a long time to recover from the financial crisis. But panellists at the KangaNews New Zealand Debt Capital Markets Summit 2019 – of which the Australian Securitisation Forum is a sponsor – believe it is finally emerging from the shadows. New issuers in various asset classes and the imminent implementation of the Reserve Bank of New Zealand (RBNZ)’s residential mortgage obligation (RMO) framework are providing momentum.

PARTICIPANTS ◆ Toby Andres Project Manager, Financial Markets RESERVE BANK OF NEW ZEALAND ◆ Paul Daley Treasurer ANZ NEW ZEALAND ◆ Debbie Long Director, Treasury and Securitisation RESIMAC ◆ Simon Pannett Director, Senior Credit Analyst HARBOUR ASSET MANAGEMENT ◆ Martin Saunders Senior Portfolio Manager CHALLENGER INVESTMENT PARTNERS ◆ Chris Stankovski Senior Director, Structured Finance FITCH RATINGS MODERATOR ◆ Deemple Budhia, Partner, RUSSELL MCVEAGH

◆ BUDHIA

In recent years there has been talk about growth in New Zealand securitisation. The market remains very small compared globally, but the last couple of years have seen significant growth. The 2018 year was a very good one for securitisation and 2019 will exceed it.

There has been a lot of activity over the last 24 months in three asset classes – residential mortgage-backed securities (RMBS), auto asset-backed securities and creditcard securitisation. RMBS was particularly slow to recover after the financial crisis. But we have had four issues in the last two years and an increase in the number of warehouses established. The quantity of nonbank lenders in the market has also increased, which will hopefully lead to more issuance.

It would be valuable to start by getting some thoughts from market participants on how the local environment has developed of late, before we discuss some of the factors that might take the market to the next level. ◆ LONG Since 2014, Resimac has issued three RMBS transactions in New Zealand. Over this time there has been a general increase in RMBS and other securitisation issuance.

This has led to the participation of more New Zealandbased investors and these investors becoming increasingly comfortable going down the capital structure. We have also seen offshore interest in New Zealand securitisation expand – including from Australia.

The most notable difference between New Zealand and Australia is that New Zealand banks do not publicly issue RMBS. But this could change with the prospect of the RBNZ’s RMO project. ◆ PANNETT Speaking of investor participation, I think Harbour Asset Management is probably broadly representative of realmoney accounts in New Zealand. Our appetite for New Zealand dollar securitisation has increased as it is an asset class which has a strong return per unit of risk. For example, securitised product with three-year duration and a double-A rating can provide similar yield to a 10-year unrated, unsecured corporate bond in New Zealand.

It is not quite a like-for-like comparison given the differences in liquidity and ratings comparability. But it is close enough of a comparison to be fruitful and it has driven us to build our resources and to put more work into the securitised asset class. We now can go down to subinvestment grade on some deals.

“RMBS WAS PARTICULARLY SLOW TO RECOVER AFTER THE FINANCIAL CRISIS. BUT WE HAVE HAD FOUR ISSUES IN THE LAST TWO YEARS AND AN INCREASE IN THE NUMBER OF WAREHOUSES ESTABLISHED. THE QUANTITY OF NONBANK LENDERS IN THE MARKET HAS ALSO INCREASED.” DEEMPLE BUDHIA RUSSELL MCVEAGH

10 · Australian Securitisation Journal | Issue 17_2020

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EVENT REPORT

But it is not all positive. There is a demand inhibitor, in that the financial crisis still casts a shadow in the sector. In one of our mandates, I need to write an eight-page credit report if we are to buy securitised product. Whereas I don’t need to write anything to buy a triple-B credit in the same mandate. This isn’t a roadblock per se because we are buying securitisation anyway. But it is instructive to the end investors’ appetite for securitisation.

This is particularly the case with KiwiSaver mandates, potentially because they are very fee-conscious and do not want to pay for something that is resource-intensive. But I think they are also very brand-aware. If they get a question from someone who has watched The Big Short it may be better for them to have an easy answer than have to explain even a very small portion of securitisation in their overall portfolio.

Budhia Will this change as more big names come

to the market?

◆ PANNETT

I think it is changing already. Having repeat issuers is helping to bring critical mass.

Budhia We have seen regulatory standard APS 120 have a big positive impact on nonbank lenders in the Australian market. Is a similar evolution taking place in New Zealand? ◆ SAUNDERS As Simon Pannett mentioned, the financial crisis still casts a shadow on the industry. Australia went into the crisis with a large securitisation market and it performed exceptionally well relative to other markets. Even so, the regulators needed to bring Australia into compliance with Basel standards so interaction with the industry regarding APS 120 was extensive. There was a lot of regulatory focus on APS 120 including multiple drafts and rewrites of the document to get it right.

The Australian Prudential Regulation Authority acknowledged that nonbanks’ use of securitisation had driven home-loan competition and margins down considerably over the prior decade. The risk associated with these loans had effectively transferred out of the system but – due to sound lending and appropriate margins – ultimately there was no loss to investors from the transition.

The net result was a lot of activity in APS 120 as regulators struggled to achieve an appropriate balance when it comes to

promoting competition between banks and nonbanks, and raising standards in line with global markets.

As an example, prior to the financial crisis banks would be able to advance 101 cents on the dollar in a nonconforming mortgage including 100 per cent loan funding plus 1 per cent premium to fund origination cost. Following APS 120, the same assets are now only getting 80-90 per cent senior funding from banks.

Nonbanks were capital-light businesses before the financial crisis. They had to build up their capital bases as an acknowledgment of the risk in their businesses. As an investor, we saw this as an opportunity to partner with select nonbanks to help them grow.

We required them to put in appropriate levels of first-loss risk capital and began providing mezzanine funding into warehouses to help bridge the gap between bank warehouse lenders and loan originators.

We began doing this around a decade ago and have developed good relationships through these arrangements.

These were assets that were previously funded by banks and performed reasonably well during a period of stress. They are the type of asset we like to invest in – with the appropriate amount of protection.

When we came to New Zealand, APS 120 had already begun to make its way here because the major banks had pushed down similar regulations to warehousing in New Zealand. The capital requirements and legal frameworks in New Zealand are like those in Australia so we have taken the opportunity to partner with several lenders here as well.

Nonbanks now have much higher levels of capital in their businesses. They are more robust, which is great for everyone in the industry. It is a better alignment of interests and, with more investors stepping in to provide mezzanine funding in warehouses during the pre-securitisation phase, we can help these businesses grow to the next level.

Hopefully the initiatives we are seeing in Australia and in New Zealand with the RMO will see more issuers and investors coming to market and produce a bigger, more robust environment for everyone. ◆ LONG The way we look at regulation is that we are marketregulated and also have additional scrutiny from our warehouse financiers, rating-agency analysis and our capitalmarket investors. Our interests are aligned as we hold the first-

“IN ONE OF OUR MANDATES, I NEED TO WRITE AN EIGHT-PAGE CREDIT REPORT IF WE ARE TO BUY SECURITISED PRODUCT. WHEREAS I DON’T NEED TO WRITE ANYTHING TO BUY A TRIPLE-B CREDIT IN THE SAME MANDATE.” SIMON PANNETT HARBOUR ASSET MANAGEMENT

12 · Australian Securitisation Journal | Issue 17_2020

loss piece in transactions and we are the servicer of the assets – so we need them to perform.

Budhia What changes has Fitch Ratings (Fitch)

seen in structures and asset classes in Australia and New Zealand?

◆ STANKOVSKI Markets tend to evolve a bit slower in the rated space when we have new lenders and asset classes coming to market. The reason is that rating agencies require a lot of historical performance data to get to the point where a rating can be assigned. In New Zealand, all the recent rated issuance has been from repeat issuers. In fact there have not been any new developments on this front in the rated market in 2019.

There have been some new transactions and asset classes in Australia, though – which shows that market evolution is ongoing and provides useful guidance for New Zealand. These transactions weren’t rated by Fitch, so my comments on these deals are from the perspective of a market observer.

One is for a buy-now, pay-later lender. The lenders in this particular asset class are relatively new and have limited historical performance data. As a result, this transaction had a ratings cap.

There has also been a 100 per cent nonresident-pool RMBS deal. In typical RMBS transactions, nonresident loans are quite low as a percentage of the portfolio – they are usually capped at around 5 per cent – so a 100 per cent nonresident pool brings some new credit issues to the table.

Analysing this transaction entails not just looking at the economy the security is in but also the economy where the borrowers are – and there will be multiple jurisdictions. One would also need to look at the concentration of borrowers in any one jurisdiction.

Another element is the risk of new laws and regulations regarding foreign investment and capital flows in these countries. To rate such a transaction, we would expect to see historical data on the relationship of defaults between resident and nonresident mortgages to be able to apply an appropriate adjustment on foreclosure frequency based on these elements.

It will be interesting to see how these two markets develop and perform going forward. We expect to see more lenders having discussions on transactions in both the sectors I have mentioned. It will also be interesting to see how much appetite there is from investors.

Budhia There is a lot of discussion about bank

capital in New Zealand. What effect might this have on the securitisation market?

◆ LONG

From a nonbank perspective, if banks need to hold more capital and – as their feedback suggests they might – this leads to increased lending rates it would be beneficial for us and could level the playing field somewhat. Securitisation is our sole source of funding so if we see growth in loan originations we would need to fund more. This would be good for the market. ◆ DALEY Capital efficiency will be on everyone’s mind in a world where capital levels have gone up substantially. If we can structure RMBS deals to get capital relief it will be a positive development.

Budhia The RBNZ has published a summary of submissions from the last consultation on the RMO. What key issues came up in the submissions and what are the next steps? ◆ ANDRES

First I want to thank all the parties that contributed to the process. When we began this consultation, two years ago, we did not envision it would take this long. But the process has been very positive and has brought about substantial improvements to the initial concept.

We have been able to develop a compromise between what we wanted as a financial-market department and from a regulatory perspective, and on the other side what the market could cope with.

“WE BELIEVE THE RMO STRUCTURE HAS DEVELOPED SINCE THE INITIAL PROPOSAL AND WE HAVE SPOKEN TO INVESTORS WHO ALSO BELIEVE IT HAS THE POTENTIAL TO DEEPEN THE MARKET IN NEW ZEALAND.” DEBBIE LONG RESIMAC

13

EVENT REPORT

We received 20 submissions over the two consultations.

Our understanding in the current environment is that investors want a broader product spectrum in the investment market. Securitisation is evolving slowly but steadily in the right direction, and this is a good thing.

We hope the RMO can contribute to this, not by dominating the market but by providing a high-quality reference product among others which investors can access.

The rates environment is currently conducive for launching a new high-grade product. We are trying now to see how much more flexibility we can provide in order to get a variety of note classes in the RMO framework. This should attract different types of investors without jeopardising the idea of a simple and standardised product.

On the issuer side, the broader and principle-based discussion was in the first consultation, which we began in 2017. In the second consultation, the submissions by issuers were focused on technicalities of operational implementation and transition. It is important we get this right from the start to give certainty to issuers and investors and ensure confidence in the market is as high as possible.

We are working through this diligently, and this takes some time. We have not released the final policy yet as the amount of due diligence we need to do on the data and legal prescriptions is substantial. We also want to give it a final independent legal review, to take place in September. We are aiming to get the policy out to the market this side of Christmas.

Budhia Is there likely to be a transition period? ◆ ANDRES Yes. The whole thing will be quite a step up from where we are today, including for us as a central bank in the context of our own involvement. We want to make sure our processes and resources are ready for what is coming. Those involved with the Reserve Bank of Australia’s committed liquidity facility in the Australian market will know how intensive this can be.

In a small-market environment, we want to avoid overburdening anyone as far as is possible – and this includes ourselves.

Budhia Paul Daley, you mentioned capital relief

as an important factor here. As a bank issuer

what other considerations are there with the RMO proposals? ◆ DALEY

None of the big banks issue RMBS at the moment – because it has not been an economic funding instrument. In this new world we will need to issue to the market, as opposed to what we do now which is to create the securities and hold them ourselves with the RBNZ accepting them as a liquid asset.

Going forward, we will need to find a market for the securities. The banks collectively hold a lot of internal RMBS and a material portion of this will need to be sold to the market. The first question facing us is who will buy them.

There are some RMBS deals out there at the moment. But we will likely be bringing much greater volume and we hope investors will be ready to buy. The preferred option is for a substantial New Zealand domestic investor market. But if this does not eventuate we will need to find investors and markets offshore. This is our biggest concern. If we can solve for this we will have solved most of the problems.

Budhia In its summary of submissions the RBNZ mentioned the possibility of supporting some changes to factors like legislative change for bankruptcy remoteness for securitisation special-purpose vehicles (SPVs) in the RMO. I am guessing this could look similar to changes that were made in 2013 around the introduction of covered bonds. What impact would this have for investor engagement? ◆ DALEY The large banks have offshore covered-bond programmes. These are similar to RMBS programmes in that they are effectively secured borrowing, where the security is a pool of mortgage loans in an SPV. The major market focus of these programmes has been northern Europe, where markets have specific legislation pertaining to covered bonds that Australia and New Zealand did not.

The second problem is that there is a potential ‘fishhook’ in most securitisations in that if a statutory manager is appointed to the bank it may be able to frustrate the operation of the RMBS structure. This is not ideal to an investor in Germany, say, which is used to covered-bond law that has been in place for more than 200 years.

The legislation for covered bonds was enacted in such a way that it made clear that the assets in the SPV are outside the

“WE WILL LIKELY BE BRINGING MUCH GREATER RMBS VOLUME AND WE HOPE INVESTORS WILL BE READY TO BUY. THE PREFERRED OPTION IS FOR A SUBSTANTIAL NEW ZEALAND DOMESTIC INVESTOR MARKET. BUT IF THIS DOES NOT EVENTUATE WE WILL NEED TO FIND INVESTORS AND MARKETS OFFSHORE.” PAUL DALEY ANZ

14 · Australian Securitisation Journal | Issue 17_2020

reach of a statutory manager. Having a legislative framework around covered bonds was useful in going to northern Europe as this is the biggest market for the product, so removing this piece of uncertainty around bankruptcy remoteness from the originating bank was also useful.

The same thing would be good for RMBS generally even though I doubt we will be going to northern Europe to sell RMBS. Making it clear that the asset class is bankruptcy-remote would be a good thing.

Budhia How is the RMO shaping up so far from

a ratings perspective? Specifically, does the fact that the New Zealand market is developing a unique product make a difference?

◆ STANKOVSKI Once the RMO comes in, we will rate these transactions using our standard criteria. Whether it is a banks’ retained deal, a term RMBS or an RMO it will be rated in the same manner. We would look at the issuer and its originations, underwriting standards and risk-management processes. We would put the portfolio through our models to determine the foreclosure frequency and recoveries, run the transaction through cash-flow analysis and apply our ratings stresses.

We expect rating outcomes in RMO transactions to be more similar than they are different. The major reason for this is the commoditised nature of the RMO – the portfolio parameters, capital structures, transaction documents and waterfall are similar.

Budhia If banks start issuing large volumes of

RMO securities, how would this affect nonbank issuance?

◆ LONG From the inception of the idea we felt strongly that it was a missed opportunity to create a product that is closely aligned with a globally recognised RMBS product, such as we have in the Australian market. There is also the risk of bifurcating the market by introducing this very standardised product as opposed to other RMBS issuance.

However, we believe the RMO structure has developed since the initial proposal and we have spoken to investors who also believe it has the potential to deepen the market in New Zealand. Investor mandates could widen and we believe this would allow them to broaden their teams and boost the securitisation market.

◆ SAUNDERS The banks are starting with what has historically been a great asset – residential mortgages – and will likely have a lot of support because of this. It is an interesting option for investors, with appropriate regulatory capital treatment. If issuers and the regulator can get investors coming in with the scale required, these investors are also likely to look to increase their yield and participate in other securitisation assets as well.

There are clear investment opportunities in the senior notes. But at this stage there is probably a limited number of investors that will look at junior notes.

If the banks are not getting capital relief, it is difficult to see how an external investor can compete with a bank’s funding cost for investment. If they are not getting any capital benefit from another investor taking on the credit risk, I can’t

“WE ARE TRYING NOW TO SEE HOW MUCH MORE FLEXIBILITY WE CAN PROVIDE SO WE CAN GET A VARIETY OF NOTE CLASSES IN THE RMO FRAMEWORK, IN ORDER TO ATTRACT DIFFERENT TYPES OF INVESTORS WITHOUT JEOPARDISING THE IDEA OF A SIMPLE AND STANDARDISED PRODUCT.” TOBY ANDRES RESERVE BANK OF NEW ZEALAND

15

EVENT REPORT

see that we will come to a price point that makes sense for either party.

It will be interesting to see how this plays out. For the senior notes we think the RMO market could become something like a semi-government market, more akin to covered bonds. But there is still a lot of money that will need to be invested in the junior and mezzanine notes. If issuers aren’t getting full benefit for doing these transactions, I am not sure how much risk transfer will occur. ◆ PANNETT The RMO has the potential to deliver critical mass in the securitisation market more broadly. We need to fund the new securities from somewhere, but I think it is more logical that it comes from senior-unsecured as a risk replacement rather than other RMBS. ◆ DALEY We would not be surprised with this either, to be honest.

Audience question Could New Zealand dollar

securitisation provide enough volume of funds to support the level of business growth local nonbanks hope to achieve?

◆ LONG We are always very cognisant of the end investor and their investment capacity when it comes to our ambitions around origination of assets. Further diversification of the investor base will be needed to fund the type of growth that could be possible.

Through the progression of our issuance in Australia we have seen the investor base diversify to include offshore, and this could also be needed to fill the gap in New Zealand.

Audience question Will bank RMO issuance be

made available to retail investors?

◆ ANDRES

The RMO is meant to be a wholesale product. This appears appropriate given the stage of development in the New Zealand market at the moment. Making it a retail product would incur a lot of time and resource costs and we do not expect this to happen any time soon. However, retail investors will participate indirectly via managed funds purchasing RMO as part of their asset allocation. ◆ DALEY It would be a difficult instrument for a retail investor to understand because mortgage pools amortise very quickly.

Investors would be getting their money back much quicker than they perhaps expect. Furthermore, as an issuer it would

be very costly if you had 500 investors to amortise notes to every month.

Audience question The best-case scenario for

New Zealand securitisation is that the RMO catalyses a bank market which increases investor engagement in the asset class and in turn provides more competitive conditions for all issuers. How likely is this to play out and what is the weakest link in the chain?

◆ PANNETT It will take a while to work out. Toby Andres and the RBNZ have put a lot of work in to ensure there is liquidity, but we do not know how it will play out until we see it in action. ◆ LONG The liquidity question always comes up, but we find that most investors are buy-to-hold in style. There will be more issuance, but whether the bonds are traded more frequently is uncertain. ◆ DALEY It is likely that there will be substitution among investors. At the moment all the RMBS we own are in our liquid-assets book. When we sell some of these securities as RMO, the liquid assets are not there anymore. But we still need the same volume of liquid assets – so they will need to be replaced.

The obvious candidates to fill our liquids book are government and Kauri bonds because they are repo-eligible assets. There will be a shuffling of the deck chairs between the banks as they start to offer securitised product to the market and also have extra demand for other products. ◆ ANDRES At the end of the day, liquidity is a question of credibility and credibility is a question of transparency and accountability. From the beginning, our view on this has been that if we can get a framework moving which is credible and highly transparent it should help make the product more liquid. This will only happen over time.

As Simon Pannett mentioned, there needs to be critical mass. If the market cannot grow beyond around NZ$15 billion (US$9.6 billion) in a meaningful period of time, say 5-7 years, it will be much harder to have liquidity in the instrument.

We think this can be achieved, though. But we all need to be realistic in a market like New Zealand. Even the government bond market is not fully liquid. It will be interesting to see how securitisation evolution plays out. ■

“FOR THE SENIOR NOTES WE THINK THE RMO MARKET COULD BECOME SOMETHING LIKE A SEMI-GOVERNMENT MARKET, MORE AKIN TO COVERED BONDS. BUT THERE IS STILL A LOT OF MONEY THAT WILL NEED TO BE INVESTED IN THE JUNIOR AND MEZZANINE NOTES.” MARTIN SAUNDERS CHALLENGER INVESTMENT PARTNERS

16 · Australian Securitisation Journal | Issue 17_2020

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Q+A

RESIMAC’S PERFORMANCE PAYING DIVIDENDS

Resimac is one of the most well-established borrowers in the Australian residential mortgage-backed securities (RMBS) market. Its funding task continues to grow and this presents a challenge – but Andrew Marsden, Sydney-based general manager, treasury and securitisation, says a consistent approach and asset performance are providing significant issuance tailwinds.

R

esimac’s assets under management continue to grow strongly – up 11 per cent in financial year 2019. How does this growth influence funding strategy? ◆ Our overall funding strategy is to support the origination activities of the business. As our assets under management and funding task continue to grow, we remain focused on meeting our objective of diversifying our funding platforms in order to fund our mortgage portfolio in an efficient manner.

We achieve this through the diversification of our global investor base to provide additional funding capacity and through the securitisation structures themselves. Our approach to diversification allows us to tailor capital structures to suit investor preferences.

This strategy has resulted in a successful US 144A programme that now makes a material contribution to our funding task.

At the same time, we have the capacity to maintain consistency in our capital-markets offering and a regular profile in issuance markets. We always ensure we maintain excess capacity in our asset and liability platforms to take advantage of opportunities and to accommodate growth in the business.

How relevant is the idea of singlename capacity in the RMBS market to Resimac? How much RMBS funding do you think you could reasonably have in the market at any one time and how important is it to supplement this type of funding with other options?

18 · Australian Securitisation Journal | Issue 17_2020

◆ Single-name capacity in the RMBS

market is very relevant to Resimac given the size of our book. It is our objective to ensure that all investors will have every opportunity to participate in our primary issuance. However, the traditional model of originate-todistribute, from warehouse to the term securitisation market, has a capacity limit and relies on a strong secondary market to enable investors to participate in new primary issuance.

for Resimac. Since we first tapped the US dollar market in 2012, there has been growing support from US investors in our RMBS transactions. We believe we have been able to maintain a regular and consistent offering in that jurisdiction.

Both our public securitisation transactions in 2019 so far have included a US dollar tranche. They received strong interest from US-based investors and the tranches were oversubscribed on both occasions.

“It seems to us that Japanese investors remain engaged and continue to see the relative-value opportunities available from Australian securitised assets, including from the nonbank sector.”

ANDREW MARSDEN RESIMAC

We have now issued more than A$29 billion (US$19.9 billion) of RMBS funding. We are continuously working on ways to diversify our funding to minimise the risks of single-namelimit restrictions on RMBS, including supplementing RMBS with other funding strategies such as whole-loan sales, master-trust structures or private placements (PPs).

The US dollar market has been an incremental source of funding for Resimac’s Premier and Bastille RMBS issuance programmes. To what extent are you still uncovering new investors and a growing pool of capital in the US? ◆ The US dollar market has been, and will continue to be, an important one

What considerations do you have around issuance to investors in other offshore markets? ◆ Regulatory considerations are important. Our transactions now comply with the Japanese risk-retention requirements in addition to US and European requirements. We will also comply with the reporting and disclosure obligations under article 7 of the new European securitisation regulations.

Japanese investors have been big players in Australian RMBS in recent years. We understand these investors are looking beyond the major banks for their allocations, but at the same time some of the biggest accounts may have been less active in 2019.

What is your read on Japanese demand in late 2019? ◆ It seems to us that Japanese investors remain engaged and continue to see the relative-value opportunities available from Australian securitised assets, including from the nonbank sector.

We received interest from several Japanese accounts in our recent transactions. In addition to having a Japanese cornerstone investor in our Premier 2019-2 transaction, we completed a PP with a Japanese bank earlier in the year.

What other structural elements have you introduced or are looking to introduce to transactions to support volume and diversification? ◆ We were able to reduce the senior, triple-A credit enhancement level to 21 per cent from 30 per cent in our latest Bastille transaction, for the first time

swap structure replaced the scheduledamortisation fund and facility to manage the risk of over- or underexpected principal collections.

Resimac recently established new warehouse lines with United Overseas Bank (UOB), MUFG Bank (MUFG) and Deutsche Bank. What value are you looking to add when bringing on new warehouse facilities? ◆ More liquidity has been available in warehouse funding over the last couple of years as a number of European, Asian and US banks have established operations in Australia. In considering whether to bring on new warehouse lines, our approach has been and will always be to create long-term business partnerships.

Our warehousing relationships also reflect our aspirations for bond

this strong collateral performance, we were able to reduce the senior triple-A credit-enhancement level in our recent nonconforming RMBS transaction, as I mentioned. We also work closely with investors to understand their sensitivities and needs.

What other factors do you generally highlight when it comes to displaying or explaining the performance of Resimac’s portfolio? ◆ The performance of our mortgage portfolio continues to improve, reflecting tighter underwriting standards, the quality of internal policies, our measured approach to credit risk and our assetmanagement and collections processes.

Resimac also has diversified channels such as online, the broker-aggregation market and direct to consumer, which have translated into a better-performing, more diversified book.

“We are continuously working on ways to diversify our funding to minimise the risks of single-name-limit restrictions on RMBS, including supplementing RMBS with other funding strategies.”

ANDREW MARSDEN RESIMAC

since our inaugural Bastille issuance in 2011 and prime US 144A issuance in 2018. This remains twice the required level for senior triple-A RMBS, though.

This change in the capital structure is a further evolution of our nonconforming platform and aligns more closely with our prime transaction structures. This is supported by a nonconforming portfolio that outperforms those of other nonconforming lenders, as we have consistently maintained arrears levels below relevant market benchmarks.

In addition to this, and as was the case with our prior US dollar transactions, the amortising US dollar denominated tranche typically follows a scheduled amortisation. In both our recent US dollar transactions, the

distribution and we consider what the bank can offer in offshore strategy, marketing and distribution. We consider the full breadth of the bank’s offering, not just the availability of balance sheet.

The warehouse facilities with UOB and MUFG in particular align with our strategy of expanding our presence with investors in Asia Pacific and Japan.

Resimac’s portfolios stack up favourably with Australian banks of all types when it comes to arrears and write-offs. How responsive are investors to these kinds of statistics? ◆ Our mortgage collateral outperforms peers, including the major banks.

Investors have responded very favourably to this, which is reflected by our growing investor base. Given

How is Resimac using technology to enhance its systems and what are the transfer mechanisms by which you expect this to flow into asset growth and the funding task? ◆ We have been at the forefront of technology development. The primary objective is using technology to enhance our systems to be flexible and scaleable, enabling growth which is aligned to our funding strategy. We are focused on digitising processes and developing a digital transformation technology platform to streamline the loan-application process and increase origination volume.

We also continue to invest in the development of our online-origination platform, which plays an increasing role in the growth of the business. ■ 19

COPUBLISHED COMMENTARY

The mezzanine component of Australian securitisation is in good shape, says ANZ. Solid credit quality, relatively attractive return and a healthy supply pipeline should be met with strong investor demand.

I

n the September 2019 Fitch Ratings-KangaNews fixedincome investor survey, Australian institutional fund managers considered structured finance the most preferred asset class for marginal investments in fixed income, for the first time in the survey’s history. With the sudden weight of expectation, securitisation offers considerable risk-adjusted return, particularly in the expanding mezzanine space.

A mixed portfolio of triple-A senior asset-backed securities (ABS) and residential mortgage-backed securities (RMBS) notes currently yields an all-in coupon of around 2 per cent. In the post-financial-crisis era the credit spread range on senior RMBS has been 70-160 basis points.

Earning 2 per cent nominal return before fees must be considered against the risk and return of alternatives such as the cash rate, 10-year Australian Commonwealth government bonds, term deposits, corporate bonds, direct property and equities. The credit quality of Australian RMBS can be considered very strong even when sensitised for geopolitical risk and a negative Australian economic outlook.

Low arrears and negligible losses remain a feature of Australian securitisation deals. However, this running yield is unlikely to be supplemented by capital gain, given the securities have relatively short average life.

Existing Australian dollar securitisation market outstandings are around A$110 billion (US$68.6 billion), approximately twice the size of the Australian dollar corporate bond market. Combining demand for residential mortgages and auto and equipment loans with the percentage of funding issued by the lenders in securitised form equates to around A$40 billion of annual supply, the majority being triple-A rated bonds.

However, higher-yielding mezzanine and junior notes below triple-A may be the real attraction of securitisation for investors, particularly for credit funds seeking returns of cash plus 350 basis points and balanced funds seeking 5.5 per cent returns.

The bank RMBS market has shifted from funding-only to capital-relief transactions. In November 2016, ANZ Banking Group issued the first major-bank capital-relief transaction in

20 · Australian Securitisation Journal | Issue 17_2020

6,000 5.355

5,000

5.244 4.851

TOTAL VOLUME (A$M)

CROWDING IN THE MEZZANINE

AUSTRAL IAN RMBS MEZZAN IN E N OTE VOL UME

4,000 3,000 2,000 1,000

2.232 1.627

1.718

2014

2015

0 2016

2017

2018

2019 YTD

SOURCE: ANZ 24 OCTOBER 2019

AUST RAL I AN SE CURI T I SAT I ON T RANCHE S – AVE RAGE SP RE AD MOVE ME NT 2 0 1 4 -1 9 ( BP s)

LARGE ADIs

SMALL ADIs

MAJOR BANKS

NON ADIs

Senior triple-A

12.00

-22.50

-14.00

-4.00

Mezzanine triple-A

29.33

-45.00

-35.00

-16.00

Mezzanine double-A -40.00

-62.50

-35.00

-60.00

Mezzanine single-A

-45.00

-65.00

-35.00

-56.00

Mezzanine triple-B

-156.67

-55.00

-43.00

SOURCE: ANZ 24 OCTOBER 2019

Australia and every primary bank RMBS issued in 2018 was in capital-relief form. Meanwhile, nonbanks increased issuance threefold by 2018 from 2014 and are generally looking for external investors in mezzanine tranches. These factors have contributed to a doubling in volume of mezzanine and junior RMBS tranches, to A$9.6 billion in 2018 from A$4.4 billion in 2014.

With increasing supply, it follows that mezzanine pricing may widen. But our observation is that this has not occurred (see table). In a low-rate environment and with steady supply we have seen more investors, domestic and international, engaging. The number of active investors for mezzanine notes in RMBS issues arranged or lead managed by ANZ has increased by more than 50 per cent over the past three years.

Looking forward, the increasing diversification of public securitisation asset classes provides the prospect of consistent mezzanine securitisation supply, particularly given the comparatively higher credit-enhancement levels required for these asset classes.

ANZ estimates total annual public securitisation issuance will continue to trend towards A$50 billion if economic conditions remain benign. This should see supply of mezzanine and junior notes remain consistently more than A$6 billion per year.

Despite tightening margins, these bonds yield an all-in coupon of around 2.5 per cent at the higher part of the capital structure and up to 7 per cent at the low end of the capital structure. We expect this to drive further investor engagement – a positive for the securitisation market heading into 2020. ■

COPUBLISHED COMMENTARY

BENCHMARK REFORM AND AUSTRALIAN FIXEDINCOME MARKETS Benchmark reform has taken an increasingly prominent place on the agenda of financial markets as the date for the cessation of LIBOR submission approaches. Commonwealth Bank of Australia assesses the landscape in late 2019.

T

he permanent discontinuation of LIBOR will be one of the most significant events in global financial history, given its use in contracts referencing more than US$200 trillion of notional volume in five currencies.

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), declared in July 2017 that the UK regulator would no longer require banks to submit LIBOR from 1 January 2022. LIBOR’s future is deemed unsustainable because the market of unsecured bank wholesale borrowing upon which it is based has become almost inactive. On a typical trading day, the number of transactions underlying three-month LIBOR is little more than a handful.

However, interest-rate-benchmark reform is about more than the discontinuation of LIBOR. Volatility in interbank borrowing rates during and after the financial crisis illustrated the need for a risk-free reference rate to serve alongside LIBOR and indeed all interbank offered rates (IBORs).

Jurisdictions around the globe have identified alternative risk-free rates (RFRs). In the UK and the US, these rates – the sterling overnight index average, or SONIA, and the secured overnight funding rate, or SOFR, respectively – will ultimately replace LIBOR. But other jurisdictions have opted for a multiple-rate approach. In its November 2018 update on interest-rate

benchmark reform, the Financial Stability Board (FSB) explained that EU authorities recognise that transition to an RFR may take long enough that maintaining EURIBOR is necessary. In other jurisdictions, regulators do not think the transition to an RFR-only environment is necessary and thus continue to support a multirate approach. Examples include Australia, Canada and Japan.

In Australia the bank-bill swap rate (BBSW) is our IBOR and the Australian overnight index average (AONIA) is our RFR. The future of BBSW is very different from that of LIBOR. As a result, the market is moving towards likely usage of interestrate benchmarks in ways suited more specifically to the characteristics of financial instruments and transactions.

Reserve Bank of Australia deputy governor, Guy Debelle, has stated that it is important for individual market participants to consider which rate is most appropriate for issuance. In particular, he has said floating-rate notes (FRNs) issued by governments, nonfinancial corporates and securitisation trusts could tie their coupon payments to the cash rate.

Two key developments in Australia are worth noting.

First, given the limited liquidity in one-month BBSW, the RBA has suggested market participants should be preparing to use alternative benchmarks. This suggestion is particularly relevant to the securitisation market as it typically uses the rate in question.

Second, movement by major markets away from LIBOR to the exclusive use of an RFR suggests that the use of RFRs is likely to increase – and this applies to Australia, too. In June 2019, South Australian Government Financing Authority priced the first-ever deal linked to the Australian RFR when it issued a one-year AONIA-linked FRN. The coupon payment is calculated from compounded AONIA plus the relevant margin.

Some overseas markets have made progress in development of a forward-looking term RFR, which would provide cash-flow certainty at the beginning of the coupon period as LIBOR does.

While such a rate may help facilitate the adoption of RFRs, the future viability of such term rates is uncertain as they depend on the development of liquid derivatives markets in RFRs. The Australian Securitisation Forum (ASF) has established a working group to consider the implications of benchmark reform for the Australian securitisation market. In September, it presented a formal industry consultation to seek feedback from market participants on, among other things, the benefits and risks of alternate benchmarks.

Whatever the future course of LIBOR, other IBORs, RFRs and term rates, fixed-income markets are undergoing important changes. All market participants are encouraged to keep abreast of the changes afoot. The time to prepare is now. ■

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22 · Australian Securitisation Journal | Issue 17_2020

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COPUBLISHED COMMENTARY

FINTECH PARTNERSHIPS BEYOND FINANCE Fast-growing fintechs need access to funds to carry out their business and, crucially, to increase customer numbers. They also have needs beyond funding, which is why Westpac Institutional Bank (Westpac) has adopted a partnership approach to working with the sector.

C

raig Parker, head of structured finance at Westpac in Sydney, says: “Being a partner does not just mean lending. It could be support through equity, transactional banking or financial market-style services.

The concept of being a trusted partner to the fintech community is about providing a comprehensive set of services.”

By their very nature, fintechs often do not fit the mould of standard bank-lending criteria. This is why many – in particular those with business models based on lending to small enterprises, consumers or homeowners – seek access to structured finance to fund their loan books.

Parker explains that each structured-finance package Westpac provides to a fintech is unique, designed to match the volume and duration of funding and based on how the transaction rates relative to the fintech’s capital base.

Westpac typically funds fintech loan books via a specialpurpose vehicle, known as warehouse funding. Parker says these loans commonly draw in other participants and have a high amount of subordination via equity and subordinated debt. “Funding needs to be in partnership with other services we provide such as transactional-banking and financial-market services,” Parker adds.

Consumer-lending fintechs have extremely high transaction volumes compared with businesses which make one-off sales so they need support to manage their transactions.

Financial-markets services are also essential for many fintechs.

A lender which provides fixed-rate loans to customers, for example, will need to draw on Westpac’s financial-markets capabilities to hedge the fixed-rate portion of its loan book to floating rates.

MATCHING LIFECYCLE STAGES Westpac has a multipillar approach to supporting fintechs through their lifecycle. The first is early-stage equity investment through the bank’s venture capital fund, 24 · Australian Securitisation Journal | Issue 17_2020

Reinventure. Examples include Kasanda, Flare, Auror, Slyp and Data Republic. Typically, these investments are made in disruptive technologies with the potential to change financial markets but which are not yet commercially proven.

The next stage is equity investing from Westpac’s own balance sheet, in companies that have proven their concept in the market and are already gaining traction. Examples include Zip Co (Zip), Uno, Open Agent and Assembly Pay. The third pillar is providing cash-flow loans to emerging corporates that have strong revenues but are not yet profitable.

Australian banks have been wary of providing debt funding to entrepreneurs, but Westpac has started making loans to businesses that do not fit the usual debt-funding metrics.

Westpac concluded that it was not fiscally responsible to lend to very early-stage companies. But it has developed a bespoke risk appetite for later-stage businesses with strong revenue streams and, ideally, equity backing.

“We have taken the time to understand business models and strategies and test where it makes sense to apply traditional debt instruments to help fund growth. We now do this earlier than we have traditionally,” says Reeta Dhar, national head of emerging industries at Westpac.

Structured finance is the fourth and final pillar. Across all stages, Westpac takes a holistic approach to supporting fintechs, providing them with broad banking and financial expertise backed by the deep sector knowledge of specialist bankers.

MUTUAL BENEFITS As Westpac has turned its focus from products and product manufacturing to providing a customer experience, it has sought out the best products in the market to offer customers.

The bank has therefore become agnostic about whether some products are manufactured in-house or provided by third parties, according to Macgregor Duncan, Westpac’s general manager, corporate and business development.

As a result, Westpac is open to partnering with fintechs to provide customers with access to their products. Zip is an example: Westpac invested A$50 million in the buy-now, paylater lender in 2017.

“The underlying rationale for the investment was that Westpac could integrate Zip into its online and mobile-banking app and into its merchant terminals to give our customers access to an alternative payment option that Westpac wasn’t able to offer,” Duncan says.

For Zip and other fintechs, the main benefit is access to Westpac’s 11 million customers, helping them overcome the big hurdle of customer acquisition. They also get access to Westpac’s expertise on regulation and compliance, which are increasingly a priority for fintechs. Finally, Duncan adds, there is the added benefit of the credibility that comes from partnering with a big bank, which can open doors to other banks around the world. ■

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COPUBLISHED COMMENTARY

NEW BLOOD For many years the Australian securitisation market has been populated by a stable set of issuers. But the private and public securitisation markets have experienced a wave of new entrants of late, which National Australia Bank (NAB) has proudly supported.

T

he issuer base has broadly been made up of established banks and nonbank entities covering the mortgageloan asset class and, to a smaller extent, auto loans and other receivables.

In part, recent growth is driven by the fintech sector, which seeks to disrupt traditional funding paths by providing fast and efficient credit to consumers. This challenges traditional lenders which are reliant on legacy IT and underwriting systems.

The trend can be seen particularly in the personal-loan or unsecured-credit sector, where time to approval is a key factor in the funnel of applications and approvals. The rapid rise of buy-now, pay-later (BNPL) lenders has also challenged incumbent credit providers.

New entrants in the BNPL space are using techniques such as bank-statement scraping technology, online identity and credit checks, enhanced risk analytics and applicationprogramming-interface integration to assist progress. Using these tools provides brokers and issuers with a user-friendly format to process applicants efficiently and in a short window, without sacrificing credit integrity.

For example, bank-statement scraping tools allow applicants to input their bank-account details into a secure system, thus making the applicant’s full transaction history available to the prospective lender within minutes. This allows verification of borrower income and expenses as well as identifying risk characteristics such as gambling and exposure to payday lending activity.

This significantly speeds up the underwriting process and makes same-day approvals possible. In some instances, lenders can approve loans in a matter of minutes. These tools can also assist with responsible-lending obligations.

FUNDING FACILITIES On the private side, several new securitisation warehouses have been established focusing on personal loans, unsecured lending and online mortgage lenders. NAB has strategically sought to partner with disruptors, providing early-stage financing for some while others already have a proven track record of lending.

26 · Australian Securitisation Journal | Issue 17_2020

Warehouse funding is an ideal incubator, providing issuers with flexible funding terms and allowing them the necessary time to accumulate the required track record to procure ratings ahead of a term securitisation. Often, external mezzanine- or junior-debt investors may participate within the warehouse, helping lower the equity impost as the portfolio continues to grow.

The result of this warehousing activity is new issuers accessing public capital markets. Last year saw inaugural transactions from Metro Finance, an auto and equipment financer which has since accessed the term markets twice. In 2019 there has been inaugural issuance from: • Zip Co (Zip), which established a revolving master trust with a first public issuance of A$500 million backed by BNPL receivables.

• Prospa, which specialises in small-business lending, securitised SME loans.

• Wingate’s debut A$200 million securitisation of personalloan receivables.

In assisting access to term markets, NAB has strategically established programmes and structures that are suited for each issuer and the behavioural characteristics of its collateral pool. In the case of Zip, its BNPL receivables pool has a short payment window reflecting the underlying installment payments and given portfolio growth rates.

Therefore, a revolving master-trust programme was ideal, enabling recycling of principal collections to acquire new receivables and providing funding tenor and a fungible pool of receivables to support future issuance.

By comparison, personal and auto loans typically have longer payment terms. A closed-pool securitisation provides matched funding of the receivable pool with credit support building from transaction close. Pleasingly, all these deals were well supported by investors with significant levels of oversubscription achieved across various public securitisations.

Key advice to a new entrant looking to start a business with securitisation funding as a medium-to-long term goal is to implement the disciplines of securitisation from inception.

Securitisation is a data-driven process with significantly more collateral and performance reporting compared with other funding options. Implementing these reporting practices from the initial stages of lending is critical to providing issuers and financiers with detailed portfolio performance data that will, in time, be required by rating agencies ahead of a term securitisation. Additionally, retrofitting of existing systems can prove expensive and time consuming. ■ ◆ for further information please contact:

Lionel Koe Director, Securitisation +61 3 9886 2571 lionel.koe@nab.com.au

Stephen McCabe Director, Securitisation +61 2 9466 7233 stephen.mccabe@nab.com.au

COPUBLISHED COMMENTARY

THE EXPANDING FIELD The Australian securitisation market is expanding as emerging lenders reach the scale at which they can consider a public transaction. Moody’s Investors Service (Moody’s) discusses the evolution of the market and prospects for new entrants.

F

intech companies and more traditional nonbank financial institutions have penetrated segments of lending, such as small business credit, that are underserved by incumbent banks. Fintechs are also gaining traction in newer niches such as buy-now, pay-later (BNPL) consumer services.

After an initial period of venture-capital and warehouse financing, nonbank players typically look to public securitisation issuance as their funding needs grow. In recent months, Moody’s rated the first capital-market transaction from Zip Co (Zip), which involved the securitisation of revolving BNPL receivables.

In the personal-lending space, Wingate Consumer Finance issued its first securitisation of unsecured personal loans. In the unsecured SME segment, Moody’s rated Prospa’s revolving securitisation of a portfolio of Australian small-business loans.

LEVERAGING TECHNOLOGY Australia has one of the highest rates of technology take-up globally, providing a fertile foundation for innovation and giving new entrants opportunities to leverage technology to target different segments in financial services.

According to KPMG, the number of fintech companies in Australia surged to more than 650 in 2018 from fewer than 100 in 2014. More than a third of these companies specialise in payment and lending services.

EST I M A T E D A CT IV E B N P L U S E R S IN A U S T R AL IA 2.5

NUMBER OF USERS (M)

2.0

2

1.5 1.0

1.1

0.5 0.4

0 FY16

FY17

FY18

* Estimate based on sum of total number of customers for each BNPL service provider. Customers using multiple providers were counted more than once.

S O U RCE: AUSTRAL IAN SECURITIE S AN D I N VESTM EN TS COM M I SSI ON 2019

28 · Australian Securitisation Journal | Issue 17_2020

Australia also has a highly concentrated banking system that is heavily focused on residential-mortgage lending and other secured financing. This creates opportunities for nonbanks to capitalise on consumer and small-business demand in niche areas of unsecured credit lending.

Over the past two years, there has been rapid customer take-up of BNPL services (see chart). Zip, Afterpay and other BNPL providers could disrupt the banks’ traditional credit-card businesses by instantly approving credit at the point of sale.

In 2018, about 3.1 million customers used Afterpay to buy products in Australia, New Zealand, the US and the UK, while Zip had 1.3 million customers in Australia in the same period.

Unsecured SME lending is another area attracting nonbank lenders. Loans to small businesses can be risky. Banks have historically required collateral for SME loans and approval processes can be lengthy, posing obstacles for small businesses — especially those with short operating histories — in obtaining finance. This creates opportunities for new entrants, such as Prospa.

Fintech SME lenders have grown quickly, with high customer retention rates. Such lenders focus on cash-flow lending instead of taking collateral, using big-data techniques to assess the creditworthiness of small businesses. As nonbank SME lenders grow, some banks and the emerging neobanks have increased their focus on this space — intensifying competition in the segment.

Overall, Moody’s views the growth of new entrants as credit positive for Australian securitisations backed by personal and SME loans. But lenders’ ability to maintain asset quality has not been tested. The widening playing field of new providers expands credit options for the whole market. The focus on specific segments could also enable such lenders to underwrite more efficiently and price risk more effectively. Both factors are credit positive.

Simultaneously, the limited track record of such lenders’ operations and, in some cases, of the lending product itself create challenges in analysing portfolios. The ability of lenders to maintain asset quality through the cycle has not been tested.

In addition, the companies could face operational challenges when confronted with higher volume of delinquent accounts or defaults in an economic downturn.

When analysing lenders with limited historical information, Moody’s analysis may incorporate additional stresses due to the lack of historical information. The extent of these stresses will depend on the mitigants observed during the originator review among other factors.

Moody’s reviews all relevant historical data including delinquency rates, roll rates, and default and recovery information. When the data is sparse, we look for alternative credit metrics such as benchmarking the asset pool against similar originators, analysing loan-by-loan information and reviewing results of the agreed-upon procedures produced by external auditors. ■

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FEATURE

ACCELERATED PATH Australia’s emerging-lender sector has broadened and matured to the point where a growing band of new names is considering public term securitisation. The cost-effective nature of securitisation funding makes the impetus for lenders to reach this point clear, and some are plotting accelerated paths to market.

BY MATT ZAUNMAYR

T

he Australian fintech market is growing rapidly and the lending sector has become one of its core components as traditional lenders, under increasing regulatory scrutiny, have shied away from certain sectors.

Some fintech lenders appear to be more focused on the technology aspect of their business than scale – presumably with platform acquisition by a larger player in mind. But others have grown their lending books to the scale where term securitisation starts to appeal as a means to recycle warehouse capacity, diversify investor base and lower funding cost.

While a weakening economic backdrop might not seem like the ideal moment for consumer lenders to enter wholesale debt-funding markets, in one key respect the timing is actually working for new securitisers. The low interest-rate environment is making high-quality securitised product increasingly desirable for yield-hungry fund managers.

The number of new issuers in the Australian securitisation market matched a post-crisis record by mid-October 2019 (see chart 1). Nonmortgage asset-backed securities (ABS) issuance will also approach record volume, supported in part by new consumer-loan-backed transactions (see chart 2).

C H A RT 1 . N E W IS S U E R S IN T H E A U S T R A L IA N S E CU RI T I SAT I O N MA R K E T

3

4

3

GETTING RATED Asset performance history is a key issue, in particular because of rating-agency requirements. Historically, rating agencies have wanted to see a full cycle of performance data before providing pool ratings. This could mean having five years of performance data for a reasonably large asset book.

Erin Kitson, director, structured finance at S&P Global Ratings in Melbourne, says a cautious approach to rating emerging and fintech lenders is justified. “We have not seen how these lenders withstand periods of stress. Data observations of borrowers’ behaviour obtained during relatively benign economic conditions might not be indicative of how the same borrowers are likely to behave during an economic downturn. Accelerated growth can also mask loss performance, which also needs to be taken into consideration.”

New lenders can have a higher degree of operational risk, particularly if the loans being serviced are in a less commonly securitised sector. Kitson says servicer transition risk is another CHART 2 . AUSTRAL IAN DOL L AR SECURITISAT I ON

BY COL L ATERAL TYPE

4

RMBS

4

3

3

VOLUME (A$BN)

NUMBER OF NEW ISSUERS

4

Sarah Samson, head of securitisation originations at National Australia Bank (NAB) in Melbourne, says: “The market for emerging lenders has been four years in the making but it is coming to fruition now. How quickly these issuers can get to market depends on their origination volume, performance history and arrears rates, among other things. But investors are more open than ever to a diverse range of assets.”

Bruce Potts, executive director, debt investments at IFM investors in Melbourne, tells ASJ: “For a long time the banks have had the nonmortgage lending market tied up and it has been difficult to maintain ABS exposures. Assets are increasingly becoming available, though, through a combination of banks’ response to regulation and the rapid technological change we are experiencing.”

There are significant challenges for new issuers, though.

Limited performance history makes obtaining a rating difficult, while limited deal flow of some collateral types makes price discovery more challenging (see p32). Even so, market participants are confident the issues are surmountable.

2

1

1

1

0

0 2011

2012

2013

2014

2015

S O U RCE: KAN GAN EWS 25 OCTOBER 2019

30 · Australian Securitisation Journal | Issue 17_2020

2016

2017

2018

2019 YTD

50 45 40 35 30 25 20 15 10 5 0

Other ABS

8.1

4.6 4.4

37.8 24.9

17.6

2016 SOURCE: KANGANEWS 25 OCTOBER 2019

6.2

2017

2018

27.5

2019 YTD

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FEATURE

Collateral diversity THE DIVERSE RANGE OF ASSETS NEW LENDERS ARE CONTEMPLATING SECURITISING ADDS ANOTHER CHALLENGING ELEMENT TO THE PUBLIC SECURITISATION EQUATION, DESPITE THE AUSTRALIAN MARKET’S APPARENT GROWING ACCEPTANCE OF ASSETS OUTSIDE RESIDENTIAL MORTGAGES. Sarah Samson, head of securitisation originations at National Australia Bank, tells ASJ lenders in well-known sectors such as prime mortgages and auto loans are less likely to be subject to a ratings cap before coming to the public securitisation market, even in the absence of significant history and track record, given the familiarity and comparability of the assets.

Prospa’s head of group capital management, Raj Bhat, says collateral type will be a key determinant of how quickly different fintech lenders will be able to access public capital markets.

“There is a significant difference between being a fintech lender in an established asset class and being one in a completely new asset class,” Bhat explains. “Much more work needs to be done by the latter to familiarise the market. It can be a long walk to securitisation.”

When a lender does not have sufficient historical asset-performance data of its own, rating agencies will typically use proxy data from collateral

pools that are as similar as possible in product, origination channels, performance and underwriting criteria.

A Fitch Ratings report published on 9 October states that this is more achievable for residential mortgages than for “SME loans or unsecured lending where origination strategies and underwriting models often lack similarities”.

Another potential consideration as the market share of emerging lenders grows, particularly for lenders originating buy-now, pay-later (BNPL) receivables, is the spectre of changing regulation.

BNPL companies are not, as of October 2019, regulated under Australia’s National Credit Act and therefore do not need to adhere to responsible-lending laws. The sector is growing rapidly, though, and with increased scale likely comes increased scrutiny.

While the diversity of assets in Australian securitisation has ticked up, transaction data will remain thin until supply consistency is

important consideration in the rating analysis of new lenders.

As businesses grow, staff technical expertise becomes a factor especially when more complex data systems and platforms based on algorithms are integral to a lender’s business.

A short track record is effectively a deal-breaker for at least one major rating agency. Ben McCarthy, managing director and head of Asia-Pacific structured finance at Fitch Ratings (Fitch) in Sydney, tells ASJ even shorter-term collateral duration does not affect Fitch’s five-year performance-history prerequisite.

“Assets like buy-now, pay, later [BNPL] may have a shorter lifespan but the volume of data is still likely to be very thin.

The only way to ensure the credit underwriting standards of a lender is to see stability and performance in the loans it is writing over time,” McCarthy says.

A 9 October Fitch report, authored by McCarthy, says lenders entering new markets “need time and proprietary data to develop stable underwriting policies and to adjust policies to stabilise and optimise performance”.

32 · Australian Securitisation Journal | Issue 17_2020

established. Latitude Financial Service’s credit-card and personalloans receivables transactions were cited as comparable deals for debut securitisations by Zip Co and Wingate Consumer Finance. However, both issuers were cognisant of a paucity of analogous transactions.

As ever, success should breed success. Consistent deal flow ought to promote investor familiarity with a type of collateral as well as pave the way for more straightforward price discovery.

Furthermore, Dylan Bourke, portfolio manager at Kapstream Capital, believes relatively less wellserved asset classes might be a more fruitful market for fintech lenders looking to build scale. “Lending to products with higher margin and fees, and lower extension risk, means fintechs can get to scale and become profitable more quickly than they can in, for example, prime residentialmortgage lending – where the margins are very low and there is very high competition,” Bourke says.

The report adds that new lenders can lean towards asset portfolios with weaker credit quality due to adverse selection of transactions that established lenders have already rejected.

Crucially, it says these problems tend to become less prominent as lenders mature.

GREEN LIGHT It is not impossible for relatively young lenders to bring successful securitisation deals to market, though. Zip Co (Zip) became Australia’s first emerging fintech lender to access the public securitisation market, with a A$500 million (US$342.8 million) securitisation of BNPL receivables priced in August.

This was the world’s first public securitisation of this type of collateral and it came relatively early in the issuer’s life. Zip was founded in 2013 and only began originating a significant volume of assets in 2017.

Peter Gray, Sydney-based founder and chief operating officer at Zip, says securitisation was always part of the

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FEATURE

“We have begun conversations with rating agencies, which is an essential step towards public securitisation. But there is no deep pool of data for SME lending. This is an impediment to us and to the development of a broader and deeper market.”

DAVID HORNERY JUDO BANK

company’s funding plans given it is the cheapest form of debt funding available for this kind of business. He adds that the timeline to market was simply a function of how quickly the book has grown.

Zip used a master-trust structure, which is well suited for revolving assets such as BNPL and credit-card receivables.

Lionel Koe, director, securitisation originations at NAB in Melbourne, said following the transaction: “The short-dated tenor of these assets naturally limits extension risk, which resonated well with a number of investors in the Zip deal – especially when compared with closed RMBS [residential mortgage-backed securities] pools where note duration is more sensitive to prepayment rates.”

Zip was able to secure a public rating, from Moody’s Investors Service (Moody’s). Ilya Serov, associate managing director at Moody’s in Sydney, says lenders typically need 3-5 years of data for the rating agency to carry out its credit work.

But this can differ depending on the underlying assets.

“Shorter-dated assets have a lot of underwriting vintages completed in a shorter period so lenders in spaces such as personal loans or BNPL may be able to attain ratings more quickly. In some cases, we have assigned ratings below triple-A to account for the lack of track record,” says Serov.

This was the case with Zip’s transaction, which came to market with a ratings cap of A1 even on its most senior notes.

This has an obvious effect on cost of funds, though Gray says the public deal was still competitive even on its standalone merits.

He comments: “Despite the superior performance of our receivables, we understood we were being penalised as a newer business and a new issuer. The overall cost is similar to our other warehouses for now, but we are taking a long-term view and are confident that the margin benefits of public securitisation will be significant for Zip in the medium and long term.”

Market users universally say public securitisation is, in theory, the optimal capital-markets funding option for emerging lenders. There is no point rushing to market, though.

Achieving a credit rating for an ABS transaction can be a resource- and cost-intensive exercise. Raj Bhat, Sydney-based head of group capital management at Prospa, says it took more than a year for the company to obtain its first credit rating – which is also capped. Prospa has not yet brought a public deal to market.

Rating agencies do not give issuers guidance on rating trajectory including the removal of caps. But Bhat says Prospa is confident that consistent performance of its assets over the coming 2-3 years should enable it progressively to remove the rating cap.

Gray has a similar view. “We need to keep a focus on refining our decision technology as we continue to build the business. The ratings will take care of themselves.”

DIFFERING APPROACHES Some lenders have looked elsewhere to diversify warehouse funding as they build performance history. Volt Bank, Judo Bank, Xinja and 86400 have all obtained unrestricted authorised deposit-taking institution licenses from the Australian Prudential Regulation Authority (APRA). The ability to take wholesale deposits provides a viable funding alternative to debt and equity.

David Hornery, co-chief executive officer at Judo Bank (Judo) in Melbourne, says a banking license changes the approach to funding. “We have been active in deposit markets since receiving our ADI licence and have been delighted with the response,” he explains. “We will continue to increase the percentage of our funding from this source but will also maintain and grow our warehouse facilities.”

Obtaining a banking license is likely even more cost and resource intensive than getting a securitisation transaction

“Onsite due diligence allows us to view a lender’s origination and verification standards. If we can see that underwriting standards are sound we are much more likely to be comfortable with the shorter performance track record most of these companies have.”

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34 · Australian Securitisation Journal | Issue 17_2020

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FEATURE

Government steps in THE AUSTRALIAN GOVERNMENT HAS ACKNOWLEDGED SIGNIFICANT HURDLES TO ACCESS TO FINANCE IN THE SME SECTOR BY ESTABLISHING THE AUSTRALIAN BUSINESS SECURITISATION FUND (ABSF), TO BE DEPLOYED BY THE AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT (AOFM).

In attempting to lower the cost of funds for SME lenders, and thus potentially to stimulate sector growth, the ABSF may also catalyse further collateral diversity in the Australian securitisation market.

Over five years to June 2024, the ABSF will invest A$2 billion (US$1.4 billion) across warehouses and other asset-backed securities (ABS) transactions to support the provision of finance to SME lenders.

In a May speech, the AOFM’s Canberra-based head of global markets and business strategy, Michael Bath, said investments would start at the secured end of the SME lending spectrum with the intention of moving towards unsecured lending as the programme develops. The goal is to assist lenders to securitise loans in public SME-backed ABS deals, thus crowding investment into the sector.

Liberty Financial is the only lender in the Australian market which regularly brings specifically SMEbacked securitisations to market on a consistent basis. An S&P Global

Ratings report published on 14 October says: “The unique risks of the SME sector make debt financing a challenge. These risks also translate to significantly higher funding costs for SMEs compared with larger corporates.”

The rating agency report also says, though, that fintech lenders may be able better to address the risk of SME financing due to their ability to “increase the availability of alternative business-performance forecast data and the tools for credit analyses”.

SME lending has been a target market for some of Australia’s fastgrowing fintechs, including Judo Bank (Judo) and Prospa. While these lenders have been able to grow their lending without government intervention, the consensus is that the AOFM’s initiative will be beneficial for the market.

David Hornery, co-chief executive officer at Judo, says: “The ABSF programme will play a very important role in seeding the SME ABS market.

It should give a lot more impetus for

rated. However, it allows lenders access to a diversified funding source while they build the track record necessary to consider securitisation.

Hornery says performance history will be particularly important for coming to market with an SME-backed transaction given the relative nascency of the asset class in Australia. In this respect, he tells ASJ the Australian Office of Financial Management’s’s Australian Business Securitisation Fund could be a tremendous boon to the sector (see box on this page).

“We have begun conversations with rating agencies, which is an essential step towards public securitisation. But there is no deep pool of data for SME lending. This is an impediment to us and to the development of a broader and deeper market,” says Hornery.

Meanwhile, an array of nonbank lenders remain bullish on their capacity to clear the ratings hurdle and get to the securitisation market.

36 · Australian Securitisation Journal | Issue 17_2020

investors to participate in what is in effect a new asset class and bring strong competition to the funding of the small-business sector.”

Raj Bhat, head of group capital at Prospa – which operates at the smaller end of the SME spectrum – agrees that the ABSF is a positive development. He adds that Prospa is very supportive of the initiative and the government’s work in its ongoing development and implementation.

“We believe the ABSF will create a more diverse and competitive finance market by accelerating capital-market acceptance of the SME unsecured asset class by several years, building public trust in the fintech sector and, ultimately, enabling small businesses to access more affordable finance,” says Bhat.

The AOFM was still in the process of hiring an investment manager as of late October 2019 and had not yet invested any of the first tranche of funding that was made available to the ABSF at the beginning of the 2019/20 financial year.

Brighte, which provides point-of-sale finance to homeowners for renewable-energy-related upgrades, is looking to accelerate its path to funding maturity. After establishing further warehouse funding in July 2019, Brighte’s head of corporate development, John Rohl, said the lender’s governance standards were adopted with public-market goals in mind. Brighte is confident rating agencies will derive comfort from the superior performance of loans to homeowners.

Another potential securitiser is Athena Home Loans (Athena), which is a prime residential-mortgage lender. The company’s Sydney-based cofounder and chief operating officer, Michael Starkey, says: “We have a focus on high-quality mortgage product, which should make assessment easier for investors and rating agencies given its familiarity. We have a funding-aware technology platform and people in the business with a lot of capital-markets experience, and we are well capitalised with a set of investors that have a long-term focus.”

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FEATURE

“Despite the superior performance of our receivables, we understood we were being penalised as a newer business and a new issuer. We are taking a long-term view and we are confident that the margin benefits of public securitisation will be significant for Zip over the medium term.”

PETER GRAY ZIPMONEY

Athena is not planning to adopt the rating-capped approach in public deals. Starkey says the company is assessing options for terming out, including possible private-placementstyle securitisations, until it has sufficient performance history for a triple-A rating.

INVESTOR ENGAGEMENT While lenders are taking different approaches and are at various stages on the journey to public securitisation, engagement with institutional investors, which will be needed to support public deals, is clearly on potential issuers’ minds.

Warehouse facilities increasingly incorporate institutional mezzanine money, which provides a natural first interaction with institutional funds. For their part, active investors say they are keen to get an idea of lenders’ credit-underwriting standards well in advance of any eventual deals.

Establishing familiarity between investors and issuers in the preliminary funding stages can abet an accelerated path to the public securitisation market, given this allows new issuers to familiarise themselves with the processes and due diligence required from fund managers.

Following Wingate Consumer Finance (Wingate)’s debut securitisation in September, the company’s Melbourne-based treasurer, James Cunningham, said executing private “mini securitisations” with institutional investors as Wingate’s warehouse balances grew allowed the issuer to reprice its senior funding. It was also a stepping stone on the path to a larger public transaction.

Potts says it is not necessary for lenders to have a rating to secure warehouse funding. IFM can do its own due diligence on platforms and practises to get comfortable with lending standards.

Dylan Bourke, portfolio manager at Kapstream Capital in Sydney, says his firm has not been involved in warehouse funding as yet but it is active in early issuer engagement as a

means to developing the comfort required to invest in public deals.

“Onsite due diligence allows us to view a lender’s origination and verification standards. If we can see that underwriting standards are sound we are much more likely to be comfortable with the shorter performance track record most of these companies have,” Bourke says.

Securitisation special-purpose vehicles are bankruptcyremote, but Bourke says it is nonetheless critical for investors also to have a view on new lenders’ resilience as corporate entities.

He explains: “Securitisation is a good tool, but you don’t want to be reliant on it. The market is designed to deal with an originator disappearing. But it is almost certain to be a chaotic process for trustees to recover assets, so we want to see businesses that are well capitalised and have strong cash flows and operating profits.”

Broadly, Potts says lenders in the Australian marketplace meet a very high standard. But new lenders are untested in times of stress, making investor due diligence all the more important. “There has not been a stress event in Australia for such a long time that it is difficult to know exactly what would happen to some fintech lenders. Tides can lift and lower all boats, but in the case of short-term lenders the tide could potentially sweep a lot out at once,” Potts says.

Market participants appear broadly comfortable with the standards being met by the majority of fintech lenders in Australia and Bourke says the prospect of more issuers and more assets in the domestic market is enticing. But there is no room for complacency on regulatory standards, he warns.

Once again, there is no substitute for a lender establishing performance history and supporting this data with public ratings. These are the key steps for fintechs looking to access the public securitisation market, while the only guaranteed solutions are time and consistency. ■

“There has not been a stress event in Australia for such a long time that it is difficult to know exactly what would happen to some fintech lenders.

Tides can lift and lower all boats, but in the case of short-term lenders the tide could potentially sweep a lot out at once.”

BRUCE POTTS IFM INVESTORS

38 · Australian Securitisation Journal | Issue 17_2020

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Find out more about membership pricing, and download an application form from: www.securitisation.com.au/membership

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COPUBLISHED COMMENTARY

THE 2019 EU SECURITISATION REGULATIONS AND THE AUSTRALIAN RMBS MARKET The EU’s new regulations regarding investments in securitisation transactions came into effect on 1 January 2019. The securitsation partners at US law firm Mayer Brown look at the impact of the new regime and, in particular, the likely consequences for issuers from Australia.

O

ffshore issuers are still grappling with how any changes might pertain to their issuance given there is a significant grey area in the regulation’s language.

This has led Australian originators to adopt varying compliance approaches.

OVERVIEW OF REGULATORY REQUIREMENTS The EU securitisation regulation – 2017/2402 of the European Parliament and of the European Council, dated 12 December 2017 – lays a general framework for securitisation and creates a specific framework for simple, transparent and standardised (STS) securitisation.

It amends directives 2009/65/EC, 2009/138/EC and 2011/61/ EU and regulations (EC) 1060/2009 and (EU) 648/2012, and will henceforth be referred to as the “securitisation regulation”. It has been applicable since 1 January 2019 to all securitisations as defined in the securitisation regulation entered into from that date and to previous securitisations to the extent that they are no longer grandfathered.

The securitisation regulation revises and consolidates previous rules relating to securitisations including those regarding risk retention, disclosure and credit granting. It also introduces a ban on resecuritisation. The securitisation regulation specifies criteria that transactions will need to

40 · Australian Securitisation Journal | Issue 17_2020

satisfy if the parties want the deal to be designated as an STS securitisation.

As was the case with past phases of EU securitisation regulation, such as the capital requirements regulation (CRR), it is Mayer Brown’s view that the securitisation regulation should not directly require compliance by Australian entities participating in securitisation transactions, except where they are subject to supervision on a consolidated basis with an EU regulated institution and they will be holding an exposure to a securitisation.

However, the securitisation regulation may indirectly result in Australian securitisation originators, sponsors and securitisation special-purpose entities (SSPEs), each as defined in the securitisation regulation, being required to provide additional disclosure to EU institutional investors for them to be able to invest in Australian securitisation transactions.

INVESTOR REQUIREMENTS Article 5 of the securitisation regulation imposes initial and ongoing due-diligence requirements on EU institutional investors. This means these investors will need to comply with the due-diligence requirements of the securitisation regulation in order to invest in a securitisation transaction with an Australian originator or sponsor.

Prior to investing in a securitisation transaction, an EU institutional investor must carry out a due-diligence assessment that considers risk characteristics and material structural features. Such institutional investors must also verify compliance with credit-granting standards, EU risk-retention requirements and, where applicable, the transparency requirements provided in article 7 of the securitisation regulation.

After making an investment in a securitisation transaction, to meet continued reporting and testing requirements an EU institutional investor has an ongoing obligation to monitor the compliance and performance of the transaction pursuant to written procedures established by the investor.

CONSEQUENCES FOR AUSTRALIAN ISSUERS EU institutional investors that invest in securitisation transactions with Australian entities were previously required to meet due-diligence assessment and monitoring standards under the CRR. Other than the reference to the transparency requirements in article 7, the securitisation regulation duediligence requirements are substantially similar to, but not the same as, the CRR due-diligence requirements.

In recent years, many Australian entities have voluntarily undertaken limited compliance with the CRR to make their securities eligible for purchase by EU investors. These already provide disclosure regarding underwriting standards and risk retention that could be sufficient to allow an EU institutional investor to meet the related due-diligence requirements of the securitisation regulation.

This conclusion is supported by certain provisions Article 7 of the securitisation regulation establishes of the securitisation regulation and other principles of transparency requirements for originators, sponsors and interpretation. Furthermore, SSPEs, requiring certain related EU regulations like specified information the CRR have similarly been and documentation to “The securitisation regulation may indirectly interpreted as not imposing be provided to investors, result in Australian securitisation originators, direct obligations on non-EU supervisory authorities and, sponsors and securitisation special-purpose entities. upon request, potential entities being required to provide additional Article 1(2) of the investors in a securitisation disclosure for EU institutional investors to be securitisation regulation transaction. able to invest.” indicates that it applies Originators, sponsors to institutional investors, and SSPEs must make originators, sponsors, original available all the underlying lenders and SSPEs. However, the securitisation regulation does documentation that is essential for understanding the transaction, together with an offering circular. For deals where not explicitly state that it only applies to such parties if they are established in the EU. there is no offering circular, a transaction summary must be In certain provisions of the securitisation regulation a provided. distinction is drawn between an originator, an original lender Issuing entities are also required to report certain or a sponsor “established in the [EU]” and one “established in significant events and to meet ongoing regular-reporting a third country”. For example, the due-diligence verification requirements. These require that certain asset-level requirements in article 5(1) of the securitisation regulation information regarding the assets underlying a securitisation with respect to credit-granting and risk retention provide one transaction be provided on specified reporting templates, to be verification standard if the relevant entity is “established in the established pursuant to technical standards.

[EU]” and a comparable but separate verification standard if There is some overlap between the general information the relevant entity is “established in a third country”. required by article 7 and the information required by Consequently, it is clear that an EU institutional investor regulation AB for US Securities and Exchange Commission must verify compliance with the applicable credit-granting and publicly registered transactions. This is also sometimes risk-retention requirements. However, the section of the article included in offering memoranda for unregistered Australian 5 investor due-diligence rules requiring that the institutional capital-markets deals. However, the provision of the asset-level investor verify compliance with the transparency requirements information specified in the European reporting templates is of article 7 is not drafted in the same way. beyond the scope of regulation AB. The phrase “where Providing this applicable” suggests that additional data is “Some EU investors may determine that the the requirement to verify potentially costly and requirement to verify compliance with the compliance with the burdensome for Australian transparency requirements under article 7, article 7 requirements entities. As a result, the is not applicable in question of whether an including the provision of asset-level data in all instances. One EU institutional investor the form of the required reporting templates, is interpretation of this needs to verify that an applicable with respect to Australian originators, language would allow EU Australian originator, sponsors and SSPEs.” institutional investors sponsor or SSPE has made to conclude that the available the information requirement to verify compliance with certain elements of required by article 7 before investing in a securitisation the transparency requirements, including the potentially exposure is one of the most important interpretive issues burdensome asset-level data requirements, is not applicable raised by the securitisation regulation for Australian with respect to Australian originators, sponsors or SSPEs originators. because the securitisation regulation does not directly apply to non-EU entities.

APPLICABILITY ANALYSIS If the market adopts this interpretation, it is unlikely the While the jurisdictional scope of article 7 is not specified, securitisation regulation will result in a significant increase it seems likely that originators, sponsors and SSPEs that are in the amount of information requested from Australian not established in an EU member state generally should not entities by EU institutional investors. However, we are aware be directly subject to the transparency requirements of the of different views on this point and some investors have taken securitisation regulation.

41

COPUBLISHED COMMENTARY

Typically, the relevant decisions are made from a the view that they will need full compliance with the article 7 marketing standpoint as well as based on what the originator requirements. can reasonably do to comply. This tends to result in relatively EU institutional investors should make their own bespoke solutions for each assessments regarding transaction and originator. their compliance with the “The third approach to the securitisation Nonetheless, common due-diligence requirements regulations is fully to comply as if the originator examples of this approach under the securitisation were an EU entity, including completion of the usually involve the regulation. Some EU undertaking of certain investors may determine required reporting templates. This approach reporting requirements that the requirement to obviously maximises an Australian originator’s or modified compliance verify compliance with the EU investor base.” with the asset-level data transparency requirements templates. This can include under article 7, including further reporting around the data fields provided and the the provision of asset-level data in the form of the required timing for compliance. reporting templates, is applicable with respect to Australian The third approach to the securitisation regulations is fully originators, sponsors and SSPEs. to comply as if the originator were an EU entity rather than an entity “established in a third country”, including completion of OFFSHORE APPROACHES the required reporting templates.

Thus far, Australian market issuers are taking varying While many in the market do not think this approach approaches to comply with the securitisation regulation. This to compliance should be required under the securitisation is somewhat like the approaches taken in the US securitisation regulation, some market participants choose to undertake it markets. The three main approaches with respect to in order to ease the marketing process of a transaction. This transactions with EU investors are: approach obviously maximises an Australian originator’s EU 1. Maintain the status quo and not make any additional investor base and is most appropriate if selling the transaction changes for the securitisation regulation compared with into the EU is important. previous market practice.

While the securitisation regulation became effective on 2. Take commercially reasonable steps to provide some 1 January 2019, the reporting templates have not yet been additional disclosure. finalised. They have recently been adopted by the European 3. Comply with the securitisation regulation as if the Commission and we expect them to be adopted by the Australian originator were a European entity.

The first approach, where the originator does not make any European Parliament and the Council of the EU in early 2020.

The market’s approach to compliance will likely continue additional changes for the securitisation regulation compared to evolve. But we anticipate that the approach taken by with the previous regime, relies on processes that are already non-EU originators will become more established once the used for regulatory compliance being sufficient to meet the final templates for asset-level data are adopted. Regardless, new EU standards.

Australian originators should continue to consult with both Transactions that comply with regulation AB or use internal and external legal counsel while considering investor regulation AB as a guide for the framework of the offering demands weighed against the burden of compliance with the circular, which is the approach of most Australian RMBS EU regulations. ■ issuers into the US market, may also meet some of the securitisation regulation’s requirements.

Many of the disclosure requirements, other than those ◆ for further information please contact: pertaining to article 7, overlap. Therefore, it is possible to achieve compliance with both the US and EU risk-retention Amanda Baker amanda.baker@mayerbrown.com requirements. For example, most Australian residential +1 212 506 2544 mortgage-backed securities transactions use the eligible Merryn Craske vertical-interest retention and vertical-slice method, which mcraske@mayerbrown.com complies with US and EU risk-retention regulatory regimes. +44 20 3130 3029 A second approach used in the Australian and US markets Jon Van Gorp is to take commercially reasonable steps to provide additional jvangorp@mayerbrown.com +1 312 701 7091 disclosure. The originator of the securitisation, with its internal Stuart Litwin and external legal counsel, will determine the extent to which slitwin@mayerbrown.com additional information can be provided, with advice from the +1 312 701 7373 dealers and their respective internal and external legal counsel.

42 · Australian Securitisation Journal | Issue 17_2020

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COPUBLISHED

Q+A

A TRUSTING RELATIONSHIP Equity Trustees is harnessing its potential as a niche market player to tailor trustmanagement solutions to new clients’ needs. ASJ discusses the approach with James Connell, Equity Trustees’ Sydney-based general manager, corporate trust and securitisation, and David Rose, Sydney-based chief financial officer of Scottish Pacific, a new client of Equity Trustees.

I

t would be interesting first of all to hear a little about the Scottish Pacific business and its engagement with Australia. ◆ ROSE Scottish Pacific is a 30-yearold business and is one of the largest nonbank suppliers of business finance.

We specialise in providing finance to businesses backed by their receivables.

Increasingly, we are also offering finance backed by other assets such as business equipment.

Scottish Pacific was originally a subsidiary of Bank of Scotland (BOS), first established as part of BOS’s expansion into Australia. Peter Langham, the Scottish Pacific chief executive, worked at BOS and then founded a business called Benchmark Finance. In early 2000, Benchmark Finance bought Scottish Pacific in Australia. It now operates in Australia and New Zealand and has offices in all the major state capitals in Australia, plus an office in Auckland.

Very recently, we refinanced our sources of wholesale funding. We fund our business through a number of securitised special-purpose vehicles (SPVs). We took the opportunity to simplify these for the receivables-finance part of our business. We have also put some warehouse financing in place for the equipment-finance business.

Through this process we decided to work with Equity Trustees.

What services are Equity Trustees providing to Scottish Pacific?

44 · Australian Securitisation Journal | Issue 17_2020

◆ CONNELL The services we are

providing to the warehouse trust are issuer and security trustee, trust manager and back-up servicer. The issuer and security trustee services are in our DNA. We are Australia’s only full-service specialist trustee company. ◆ ROSE We sell our receivables – or our equipment assets – into an SPV which then needs to be managed by an independent third party. Equity Trustees provides the trust-management and servicing role, managing the facility and the cash movements in and out of that facility. ◆ CONNELL Equity Trustees issues the notes to subscribers. This funds the purchase of assets which are then assigned to the warehouse trust. When the notes are issued and the assets are assigned, the obligation to manage the pool of receivables shifts to us. We need to ensure payments are calculated and made correctly, and that loan performance is reported to investors.

This goes beyond what traditionally exists in the pure trustee sphere, which is why it is so important to have the best solution for the trust-management part of the deal.

How do these solutions differ from what might be available elsewhere in the market? ◆ CONNELL In building our debt capital markets and securitisation offering, including in the trust-management space, we are responding to demand in the market. When we looked to build the Equity Trustees securitisation business in Australia, we wanted to respond directly

to questions and observations the market had raised with us. These include how the challenges of complicated securitisations can be managed without the frustrations of using Excel spreadsheets and the inevitable ‘fatfinger syndrome’.

One of the options was to work with Moody’s Analytics and to purchase its platform to model the complex programmes required to perform reporting and calculations. Moody’s Analytics has modelled for the Reserve Bank of Australia and numerous nonbank lenders. We saw this as a much more compelling solution than building beta programmes using Excel.

We wanted to build our trustmanagement system from scratch and come up with a next-generation solution to what our clients say is an area of potential development and improvement in the trust-management space. Coming up with a better solution for our clients is key.

Scottish Pacific has existing partnerships, so how and why did it go about engaging Equity Trustees? ◆ ROSE We initially put out a tender for the trustee services to be provided to our invoice-finance master trust. Equity Trustees responded, as did a couple of other companies – including our incumbent servicer.

We were pleased with the way Equity Trustees went about building a new relationship with us and were suitably impressed so we wanted to try to find a way to work together going forward. Therefore, when we created

our standalone equipment-finance warehouse we thought this was the perfect opportunity to build the first part of the relationship.

Has Equity Trustees come up with a better solution for Scottish Pacific? ◆ ROSE We are just starting to work together on these arrangements so it’s hard to answer that yet. What we can say is that, as a business, Scottish Pacific likes partnerships and what we really like about Equity Trustees so far is the commitment to building the partnership and a willingness to work closely with us in establishing a new part of our business. ◆ CONNELL We want to build long and deep commercial relationships with our partners and understand what their business needs are. This means taking a long-term view of the relationship

most globally renowned analytical teams is behind their deals.

How does the ‘brand factor’ fit into the equation? ◆ ROSE Reputation is always important in financial services but what makes and drives relationships is people. We really like the people that were put in front of us and their commitment to the relationship. At the end of the day your people are your brand. ◆ CONNELL We were introduced to Scottish Pacific through a market contact who knew the company was putting some new structures together.

The key to progressing the relationship was that we were committed to understanding the client’s needs and the transaction itself, and to come up with pricing and a template that factored in a degree of flexibility.

◆ CONNELL It is no secret that the

Australian trustee market is more competitive now than it has been in a very long time. But I don’t think any of the new players are seeking market dominance.

I think liberalisation is likely to occur and this can only benefit clients like Scottish Pacific, because they will be able to spread work between two or three very robust players to build strong multilateral partnerships. ◆ ROSE The Scottish Pacific business is of sufficient size now to accommodate multiple partners. This year our turnover will be close to A$20 billion (US$13.7 billion), which gives us scale to work with.

What do you believe will be the most important factors in this partnership going forward?

“It is no secret that the Australian trustee market is more competitive now than it has been in a very long time. But I don’t think any of the new players are seeking market dominance.”

JAMES CONNELL EQUITY TRUSTEES

rather than a short-term, transactional approach.

Even though we are using a system provided by Moody’s Analytics, we continue to do all the heavy lifting.

We have purchased a system to service our clients in the best way possible. In various meetings and discussions I have had with clients, I have characterised this in the sense that we didn’t build our own email system and we didn’t build our own office because we accepted there were experts that could do it better for us.

We have purchased a system that allows us to go far beyond the traditional Excel-based trust-management systems that are available. The client will not see or hear from the service provider but will have the assurance that one of the

We don’t believe that rate-card pricing in a template format is an optimal solution. It is better to understand the transaction and allow some flexibility so a business can, for example, draw down during the course of a transaction according to its financial needs.

What sort of flexibility does this kind of arrangement afford the Scottish Pacific business? ◆ ROSE It is the underlying SPVs that provide us with flexibility. However, the arrangement is a crucial support for our business because it builds another important relationship. It also provides us additional insight into the market through a range of different analytical and management-information tools.

◆ ROSE Relationships between

businesses are built around people and their ability to get together and share information on how the partnership is progressing in an honest way. Ultimately it must work both ways. Getting together on a regular basis and talking about what is going well and what can be improved is fundamental to this. ◆ CONNELL We pride ourselves on this approach. Our front office is a relatively small Sydney-based team but this means we are nimble and, therefore, our decision-making capabilities are flexible. Our competitive edge and our differentiator is that we can move quickly. We don’t have a multilayered or offshore management structure, which means we can respond to and execute decisions quickly for our clients. ■ 45

EVENT REPORT

AUSTRALIAN ISSUERS’ WIDENING SCOPE IN JAPAN Australian prime residential mortgagebacked securities (RMBS) issuers have been able to call on significant Japanese investor interest in recent years. At this year’s Australian Securitisation Forum (ASF) Japanese investor seminar, nonbank issuers expanded on their hopes for further migration of Japanese investment to a wider range of collateral.

T

he ASF held its fifth Japanese investor seminar at the Australian embassy in Tokyo on 15 October. The seminar hosted 120 attendees in 2019. Attendance has grown strongly since the event’s inception and particularly in the last two years. This year, the majority of the crowd comprised current Japanese investors looking to undertake due diligence on the Australian securitisation market.

The interest clearly flows both ways. What was once just a bid for major-bank RMBS has gradually filtered into nonbank prime RMBS. As Japanese investors become more comfortable with the sector, and as margins in prime product are squeezed in a low-rate environment, nonconforming RMBS and other asset-backed securities (ABS) transactions could be a logical next destination for Japanese money.

Simultaneously, Australian nonbanks’ aggregate funding need is growing at the same time as the market for nonmortgage ABS continues to expand (see p30). In a panel discussion at the Tokyo event, three prominent Australasian

46 · Australian Securitisation Journal | Issue 17_2020

nonbank RMBS and ABS issuers outlined their strategies for increasing engagement with the Japanese investor base as their own businesses and funding needs grow.

Hiroshi Oki, director and executive officer, investment and treasury, at SBI Sumishin Net Bank, also sat on the panel, while Takehiro Yamamiya, director, ANZ Securities Japan, was the moderator.

BUILDING ENGAGEMENT As the aggregate nonbank funding requirement has ballooned in recent years, the largest players in the sector have acknowledged that their domestic market, as currently construed, has limited capacity to support intended future growth. With more nonbank issuers reaching a scale that requires offshore investment support, more are looking to markets like Japan.

Bianca Spata, Sydney-based head of group funding at flexigroup, told the audience in Tokyo: “We are focused on growing the business in Australia and New Zealand, and building a more diversified investor pool is critical to this growth. We see a great opportunity to expand our engagement with Japanese investors and hope to see their increasing comfort with nonbank issuers as well as a move to diversified asset classes beyond prime RMBS.” Spata added that flexigroup intends to come to market more frequently with its existing securitisation programmes as well as to establish new programmes including a planned Australian credit-card master trust.

Eva Zileli, treasurer at Latitude Financial Services (Latitude) in Melbourne, acknowledged that establishing fruitful relationships with Japanese investors typically takes time. “As the first Australian asset class to gain large-scale participation from Japanese investors, the engagement on major-bank prime RMBS was extensive and those investors understandably required a lot of due diligence. Once they were comfortable, though, they invested and have continued to do so,” she said.

Zileli added that Japanese investors have become more willing to diversify their portfolios as they get comfortable with the performance of Australian RMBS. “The logical next step is to look at Australian ABS and potentially to go down the capital structure as well. We are beginning to see this flow,” Zileli revealed.

LOCAL COMPLIANCE One of the key considerations for issuers seeking access to any offshore investor base is compliance with local transaction standards and regulations. In Japan, new risk-retention rules were introduced in March 2019. These require issuers to retain a 5 per cent first-loss piece of a transaction.

Mortgage House issued its first public RMBS transaction in May 2019, printing A$300 million (US$205.7 million). The issuer’s Sydney-based head of securitisation, Steven Mixter, told the audience in Tokyo that given the transaction’s size it was

targeted at domestic investors and therefore did not need to meet Japanese risk-retention standards.

However, he added: “We want to grow and therefore plan to undertake larger RMBS transactions. Meeting Japanese investor requirements is on our radar for our next deal.”

Latitude and flexigroup have been issuing securitisation deals with offshore support for several years and are thus more readily set to meet and adapt to new international regulatory requirements.

Spata said while flexigroup’s most recent Australian dollar deal was undertaken prior to the Japanese risk-retention requirements coming into force, it was compliant with EU risk-retention requirements. She adds that the intention is for flexigroup’s next deal also to adhere to Japanese rules.

Zileli added that relative homogeneity in international regulatory standards helps grade the path for issuers.

“Japanese risk-retention requirements are aligned with those in the EU and US. We retain 5-8 per cent of the first-loss piece of transactions, so it is quite straightforward for us to demonstrate compliance.”

Metting Japanese risk-retention standards may be easier for ABS issuers than RMBS issuers, according to Mixter, given there is typically less spread to compensate for the equity the issuer is required to hold in RMBS. As a result, Mortgage House will likely use a retention vehicle to ensure Japanese regulatory compliance.

BENCHMARK REFORM The issue of benchmark reform as global markets contemplate the cessation of LIBOR and the move to alternative reference rates was also discussed by panel members. It is particularly relevant to offshore investor engagement given the friction that may be caused by various jurisdictions adopting different approaches to reform.

Mixter said: “One-month BBSW [bank-bill swap rate] may not be perfect but a number of things need to occur for an alternative rate to be accepted. Whether or not investors are going to accept a new rate is the critical test if such a rate is to come into being.”

Panel members told the audience the Australian market is preparing for the discontinuation of LIBOR but that there is also a long way to go on reaching consensus about how to address the contentious one-month BBSW which the domestic securitisation market typically uses.

Spata told the audience that the ASF is on the front foot regarding IBOR reform, having established an industry group in 2018 including participants from across the market to enable a wholesale discussion of the implications of benchmark reform for Australia.

The main concern Australian regulators have with onemonth BBSW is that transaction data is variable and tends to rely on banks buying back their own short-term funding instruments rather than issuing. Zileli said observable data in one of the proposed alternatives, the Australian overnight index average (AONIA), eclipses that of one-month BBSW. In June, South Australian Government Financing Authority became the first Australian issuer to price an unsecured bond deal linked to AONIA. Zileli said: “It will likely take similar leadership from an issuer in the RMBS space to test the market by pricing a transaction off AONIA or another benchmark to see how it works.” ■ 47

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MEMBER PROFILES

ASF MEMBER AND SECURITISATION ISSUER PROFILES

The Australian Securitisation Forum (ASF) is pleased to share a directory of its key member institutions and Australasian securitisation issuers. The following profiles cover 31 members of the ASF and 34 issuing entities. Find the member profiles beginning on this page and the issuer profiles from p57.

The ASF is self-funded through membership fees and other revenue sources. Membership is corporate-based and open to participants in the securitisation and covered-bond markets.

Membership offers a unique opportunity to participate meaningfully in shaping the future of Australasian securitisation.

AMAL

E

stablished in 1994, AMAL is Australasia’s only integrated provider of loan-servicing, corporate-trust and agency services. It has more than A$13 billion of funds under administration and supervision in Australia and New Zealand.

AMAL provides originators and lenders with a one-stop shop for the range of services required in a lending programme including industry-leading technology and support, a highly experienced operational team and a rigorous governance, risk and compliance programme.

Clients range from the smallest start-up to some of the region’s and the world’s largest financial institutions.

◆ CONTACT DETAILS

Brendan Weir Executive Director – Loan Servicing +61 417 771 441 brendan.weir@amal.com.au www.amal.com.au

ANZ

ASHURST

A

A

◆ CONTACT DETAILS

◆ CONTACT DETAILS

NZ’s capital-markets team provides dynamic access to global pools of liquidity via a fully integrated, superregional debt-capital-markets offering that encompasses bonds, loans and hybrid transactions. The bank’s regional positioning, strong balance sheet and commitment to supporting clients’ transactions underpin the team’s awardwinning funding solutions.

Backed by ANZ’s double-A category credit rating and robust balance sheet, the capital-markets team’s strength is in tailoring funding solutions – including bonds and structureddebt transactions – specifically for clients to provide certainty of execution and satisfy key price, structure and distribution metrics.

Graham Metcalf Global Head of Structured Capital Markets +61 2 8937 8606 graham.metcalf@anz.com www.anz.com/institutional

Nick Procter Executive Director – Corporate Trust +61 400 668 340 nick.procter@amaltrustees.com.au

shurst acts for a range of participants in domestic and offshore markets – including nonbanks, international banks and funds, domestic banks and originators – in respect of a range of asset classes. The Ashurst securitisation team has established a number of new securitisation programmes in the past 12 months. Notable transactions in the past year include acting for StockCo, Judo Bank, Fleetcare, Brighte, Get Capital and OnDeck, in addition to a number of private transactions.

The Ashurst securitisation team in Australia works closely with Ashurst securitisation teams globally, including in Germany, London and Asia.

Jennifer Schlosser Partner +61 2 9258 5753 jennifer.schlosser@ashurst.com www.ashurst.com

Jamie Ng Partner +61 2 9258 6753 jamie.ng@ashurst.com

49

MEMBER PROFILES

BLOOMBERG

BNY MELLON

B

S

◆ CONTACT DETAILS

◆ CONTACT DETAILS

loomberg’s collateral-, scenario- and credit-analytics tools empower investors quickly to determine the profile of a portfolio and understand where the true risk lies in securitised mortgage investments. Bloomberg analytics power Bloomberg’s portfolio and position-keeping systems and can also be accessed programmatically to feed third-party applications.

Bloomberg has also partnered with price makers across Australia to aggregate pricing on a single platform. In addition, the company provides clients with independent pricing of Australian RMBS alongside topical research and indices on the Australian real-estate and fixed-income markets.

ince establishing its Australian office in 1975, BNY Mellon has made a number of investments in the market to build out its global corporate-trust franchise.

BNY Mellon’s global footprint and market expertise deliver a full range of issuer and related investor solutions including in the trustee, paying-agent, trust-management, investor and RBA reporting areas. BNY Mellon’s securitisation services are delivered though a robust analytics platform using leading global technology enabling bespoke modelling while reducing risk.

At the end of March 2019, BNY Mellon Corporate Trust served as trustee or paying agent on more than 52,000 debtrelated transactions across the globe.

Robert Wagstaff Head of Market for Australia, Corporate Trust +61 2 9260 6039 robert.wagstaff@bnymellon.com www.bnymellon.com/au/en/index.jsp

Heena Chakravorti Sales Manager +61 2 9777 1200 hchakravorti@bloomberg.net www.bloomberg.com

CLAYTON UTZ

COMMONWEALTH BANK OF AUSTRALIA

C

C

layton Utz delivers value based on deep experience advising on the most complex issues in securitisation transactions and drawing on the expertise of leading practitioners in the areas of tax, regulation, and restructuring and insolvency to ensure transactions are successful.

Clayton Utz has a long history in the domestic and international securitisation markets, being there from the beginning and maintaining a leading reputation with a bandone ranking in Chambers Global. It also played a key role in the development of Australia’s covered-bond market.

The Clayton Utz team supports the development of the Australian securitisation industry, including volunteering time to the Australian Securitisation Forum. ◆ CONTACT DETAILS

Andrew Jinks Partner +61 2 9353 5818 ajinks@claytonutz.com www.claytonutz.com

ommonwealth Bank of Australia is Australia’s leading financial institution, with total assets of A$976.5 billion as at 30 June 2019. The group is rated AA- by S&P and is the 13th largest bank in the world by market capitalisation. The bank is headquartered in Sydney and has a global presence throughout Asia, New Zealand, the UK and North America.

The institutional banking and markets division provides capital-raising, risk-management and transactional-banking solutions to the group’s institutional clients. The division’s approach is underpinned by rich analytics, insights from industry experts, innovative technology and a deep commitment to building long-lasting relationships.

◆ CONTACT DETAILS

Sonia Goumenis Partner +61 2 9353 4378 sgoumenis@claytonutz.com

50 · Australian Securitisation Journal | Issue 17_2020

Rob Verlander Executive Director, Debt Markets Securitisation +61 2 9118 1228 verlanro@cba.com.au www.commbank.com.au/debtmarkets

CREDIT SUISSE

DELOITTE

C

U

redit Suisse is one of the world’s leading financial-services providers. Credit Suisse was one of the first international banks to open in Australia and has maintained a continuous presence since 1969.

Within the Australian and New Zealand securitisation business, Credit Suisse provides financing and capital-markets solutions to a variety of clients. Credit Suisse has a skew to new and emerging sectors, asset classes and issuers, being prepared to spend the extra time to understand an opportunity and provide the flexibility that emerging areas require to thrive.

◆ CONTACT DETAILS

Will Farrant Managing Director and Head of Australian and New Zealand Asset Finance +61 2 8205 4891 will.farrant@credit-suisse.com www.credit-suisse.com

nderstanding the needs of clients and responding to them quickly with consistent, knowledgeable advice and strategic ideas is the cornerstone of the client-service philosophy at Deloitte.

Deloitte’s market-leading securitisation practice has global reach and capabilities which allow it to leverage work performed in other jurisdictions and to access the most up-todate market practices from around the world.

Deloitte’s designated Australian securitisation advisory team works closely with many industry participants on a range of projects including issuance, debt advisory, and M&A due diligence.

◆ CONTACT DETAILS

Heather Baister Partner, Audit and Assurance +61 2 9322 591/ +61 409 696 886 hebaister@deloitte.com.au www.deloitte.com/au

DEUTSCHE BANK

EQUITY TRUSTEES

D

E

◆ CONTACT DETAILS

◆ CONTACT DETAILS

eutsche Bank is a global bank operating in 60 countries including Australia. Its global securitisation group combines an ability to commit capital with an integrated approach to the debt needs of issuers and investors.

The Australian team has been a market leader, providing innovative client solutions and service, for more than a decade.

Kelly Mantova Director and Head of Asset Backed Securities +61 2 8258 3159 kelly.mantova@db.com www.db.com

quity Trustees was established in 1888 to provide independent and impartial trustee and executor services to help families in Australia protect their wealth. As Australia’s leading specialist trustee, Equity Trustees offers a diverse range of services to corporate clients, banks, lenders and borrowers, and individuals and families.

The corporate-trustee-services division is responsible for more than A$60 billion of funds under management.

Responsible-entity and corporate-trustee services are provided to more than 100 leading local and international banks, financiers, investment managers and super funds. The DCM and loan-market services team was established in 2017.

Equity Trustees provides a full range of corporate-trust and securitisation services for issuers and sponsors.

James Connell Senior Manager, Structured Finance – Corporate Trust +61 2 9458 5509 / +61 428 526 863 jconnell@eqt.com.au www.eqt.com.au 51

MEMBER PROFILES

ETICORE

FITCH RATINGS

E

F

ticore provides corporate-trustee, trust-management, back-up-servicing, RBA reporting, trust-accounting and associated services to meet its clients’ securitisation and structured-debt requirements, aiming to provide exceptional service, quality solutions and deep experience.

Eticore works to create flexible and bespoke solutions, using a fresh approach and the most up-to-date technology, while playing a dependable fiduciary role. The team is experienced and technically proficient. Its process is transparent from pricing to service levels, providing certainty for issuers and investors. Eticore understands all the pain points, which is why it designs a solution that is easier and more agile specifically to meet clients’ needs.

itch Ratings (Fitch) is a leading provider of credit ratings, commentary and research. Dedicated to providing value beyond the rating through independent and prospective credit opinions, Fitch offers global perspectives shaped by strong local experience and credit-market expertise. The additional context, perspective, and insights Fitch provides helps investors make important credit judgements with confidence. Fitch has 360 dedicated structured-finance professionals, including 17 Sydney-based analysts. ◆ CONTACT DETAILS

Natasha Vojvodic Head of Australia and New Zealand Structured Finance +61 2 8256 0350 natasha.vojvodic@fitchratings.com Spencer Wilson Structured Finance Business and Relationship Management +61 2 8256 0320 spencer.wilson@fitchratings.com www.fitchratings.com

◆ CONTACT DETAILS

Belinda Smith Chief Executive Officer +61 2 8278 9520 belinda.smith@eticore.com.au www.eticore.com.au

HERBERT SMITH FREEHILLS

INTEX

H

I

erbert Smith Freehills is one of the world’s leading professional-services businesses with staff in 27 offices advising across the globe. Herbert Smith Freehills’ securitisation and structured-finance specialists are at the forefront of many first-of-a-kind transactions, developing innovative financing solutions that reflect the consistently changing markets in which the firm’s clients work.

Herbert Smith Freehills offers comprehensive multijurisdictional coverage, advising arrangers and lead managers, corporate issuers, originators, credit enhancers, trustees, rating agencies and other market participants on a range of products and asset classes.

◆ CONTACT DETAILS

Patrick Lowden Partner +61 2 9225 5647 patrick.lowden@hsf.com Vinh Huynh Executive Counsel +61 2 9225 5196 vinh.huynh@hsf.com

ntex is the industry’s leading provider of cash-flow models and analytics, with more than 40,000 RMBS, ABS, CMBS and CLO deals modelled from around the globe, including Australia and New Zealand.

Intex is relied upon by hundreds of arrangers, investors, issuers and others for complete, accurate and timely cashflow models used in trading, portfolio-management and risk-management applications. Intex’s applications include INTEXcalc for single-security and portfolio analysis and cash-flow stress testing, the INTEX Subroutine API for system builders, and INTEX DealMaker for structuring new deals.

Intex is an independent, objective and privately held company with offices in Massachusetts, London and Shanghai.

Laura Sheridan Mouton Partner +61 2 9225 5004 laura.mouton@hsf.com ◆ CONTACT DETAILS

www.herbertsmithfreehills.com

52 · Australian Securitisation Journal | Issue 17_2020

www.intex.com

J.P. MORGAN

KING & WOOD MALLESONS

J

A

◆ CONTACT DETAILS

◆ CONTACT DETAILS

.P. Morgan’s corporate and investment bank is a global leader across banking, markets and securities services.

The world’s most important corporations, governments and institutions entrust the firm with their business in more than 100 countries. J.P. Morgan is a global leader in credit distribution, balance-sheet solutions and securitised products across commercial and consumer asset classes.

Stephen Magan Executive Director, Spread Markets +61 2 9003 8362 stephen.s.magan@jpmorgan.com www.jpmorgan.com/country/AU/en/jpmorgan

s the first and only global law firm to be headquartered in Asia, King & Wood Mallesons (KWM) is connecting Asia to the world and the world to Asia. Strategically positioned in the world’s growth markets and financial capitals, KWM’s securitisation team has acted on almost every landmark securitisation transaction in the Australian market and an increasing number in Asia.

KWM’s clients value its global network, legal expertise in key disciplines and strong relationships with regulators and market participants. Whether you are an arranger, lender, originator, trustee or rating agency, KWM can help you anticipate and avoid execution, regulatory and compliance risks.

Ian Edmonds-Wilson Partner, Banking and Finance +61 2 9296 2520 ian.edmonds-wilson@au.kwm.com www.kwm.com

KPMG

MACQUARIE GROUP

K

M

PMG is a global network of professional firms providing a full range of services to organisations across a wide range of industry, government, and not-for-profit sectors.

KPMG Australia has a dedicated team of debt specialists including experts in securitisation. Drawing on years of experience, the firm offers a wide range of services to clients that access funding via the securitisation market for a broad cross-section of asset classes.

KPMG’s end-to-end service includes independent advice during each phase of a securitisation transaction and, if required, running a competitive process to identify the right funding partners in establishing cost-effective and flexible warehouse funding.

◆ CONTACT DETAILS

John Barry Partner, Corporate Finance +61 3 9288 6876 johnbarry@kpmg.com.au www.kpmg.com.au

acquarie Group (Macquarie) is a global diversified financial group that provides a range of services to clients including asset-management and finance, banking, advisory, and risk and capital solutions across debt, equity and commodities. Founded in 1969, Macquarie employs more than 15,000 people in more than 30 markets.

In fixed-income markets, Macquarie’s commodities and global-markets group focuses on providing warehousing, structuring and distribution of securitised debt for clients in Australia and Europe. It also provides secondary-market liquidity and interest-rate risk-management services via structured solutions and derivative-based products.

◆ CONTACT DETAILS

Kevin Lee Division Director, Debt Origination and Structuring +61 2 8232 8577 kevin.lee@macquarie.com www.macquarie.com/au/corporate 53

MEMBER PROFILES

MINTERELLISON

MOODY’S

M

M

interEllison is an international law firm, headquartered in Australia and regarded as one of the Asia-Pacific region’s premier law firms. Its capitalmarkets team sits at the forefront of local and global market trends, recognised for its role in delivering some of the industry’s most complex and innovative transactions.

The firm’s securitisation practice acts for major industry participants across a variety of asset classes.

MinterEllison has teams collaborating across Australia, New Zealand, Asia and the UK to deliver exceptional outcomes for its clients. MinterEllison is also actively engaged with clients in preparing and responding to regulatory developments which are having a major impact on the securitisation industry.

◆ CONTACT DETAILS

John Elias Partner +61 2 9921 4115 john.elias@minterellison.com www.minterellison.com

oody’s is a​n e​sse​ntial component of global capital market​s, providing credit ratings, research, tools and analysis that c​ontribute to transparent and integrated financial markets.

Moody’s Corporation (NYSE: MCO) is the parent company of Moody’s Investors Service – which provides credit ratings and research covering debt instruments and securities – and Moody’s Analytics – which offers leading-edge software, advisory services and research for credit and economic analysis, and financial risk management.

◆ CONTACT DETAILS

Pratik Joshi Business Head, Structured Analytics and Valuation, Australia/New Zealand +61 2 9270 1405 pratik.joshi@moodys.com www.moodys.com

MITSUBISHI UFJ FINANCIAL GROUP NATIONAL AUSTRALIA BANK

M

itsubishi UFJ Financial Group (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with more than 360 years of history, MUFG has a global network with around 3,000 locations in more than 50 markets. The group has in excess of 180,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management and leasing.

The group aims to be “the world’s most trusted financial group” through close collaboration among its operating companies, and to respond flexibly to all the financial needs of its customers, serving society, and fostering shared and sustainable growth for a better world.

N

ational Australia Bank (NAB)’s operations in Asia, Australia, New Zealand, the US and the UK serve more than 11.5 million banking and wealth-management clients, providing access to international financial markets and a range of specialised funding, liquidity, investment, asset-services and risk-management capabilities.

A committed and leading participant in the securitisation market, NAB’s team has cemented the bank’s position as a key arranger and lead manager of capital-markets and balance-sheet deals, through continued innovation and a deep understanding of the needs of its issuer and investor clients. This has placed NAB atop the securitisation league tables (KangaNews Q1-Q3 2019) and winner of the KangaNews Australian Securitisation House of the Year award 2012-18.

◆ CONTACT DETAILS

John Stormon Managing Director and Head of Securitisation, Australia and New Zealand +61 2 9296 1381 john_stormon@au.mufg.jp www.mufg.jp/english 54 · Australian Securitisation Journal | Issue 17_2020

◆ CONTACT DETAILS

Sarah Samson Head of Securitisation Origination +61 3 8641 2997 sarah.samson@nab.com.au www.nab.com.au

NATIXIS

PERPETUAL CORPORATE TRUST

N

P

atixis is a French multinational financial-services firm specialising in asset and wealth management, corporate and investment solutions, insurance and payments. A subsidiary of Groupe BPCE, one of the largest financial-institution groups in France through its two retail networks, Banque Populaire and Caisse d’Epargne, Natixis has nearly 16,000 employees across 38 countries. Its clients include corporations, financial institutions, sovereign and supranational organisations, and the customers of Groupe BPCE’s networks.

Listed on the Paris stock exchange, Natixis has a solid financial base with CET1 capital under Basel 3 of €11.1 billion, a Basel 3 CET1 ratio of 11.5% and quality long-term ratings (Standard & Poor’s: A+ / Moody’s: A1 / Fitch Ratings: A+).

erpetual Corporate Trust (Perpetual) is a leading provider of corporate fiduciary services to the Australian securitisation industry, administering more than A$710 billion on behalf of its clients as of July 2019. Services include trustee and security-trustee, trust-management, accounting, loans-custody and bond-safekeeping, standbyservicing, data and analytics solutions.

The firm’s knowledge of financial markets, its trustee heritage and the expertise of its team ensures it is the trusted partner to clients throughout the lifecycle of a securitisation programme. Perpetual provides a link between issuers, the RBA and the investment community through the Australian Data Warehouse, Perpetual’s proprietary database supporting market standardisation, transparency and comparability. ◆ CONTACT DETAILS

Rod Ellwood General Manager, Debt Market Services +61 2 9229 3150 rod.ellwood@perpetual.com.au www.perpetual.com.au/corporate-trust

◆ CONTACT DETAILS

apac.cib.natixis.com/australia

PWC AUSTRALIA

RBC CAPITAL MARKETS

P

T

wC Australia is a member of PwC, a network of firms in 158 countries committed to delivering quality in assurance, advisory, legal and tax services. PwC has a specialist structured-finance team globally, including dedicated teams in the Asia-Pacific region. The team provides advice, in-depth market insight and pre-eminent transaction support to clients. PwC’s industry specialisation allows it to cocreate solutions with clients for their sectors of interest.

◆ CONTACT DETAILS

Sarah Hofman Partner +61 2 8266 2231 sarah.hofman@pwc.com Jade Chong Director +61 2 8266 1300 jade.chong@pwc.com www.pwc.com.au

Rob Spring Partner +61 2 8266 1643 rob.spring@pwc.com Grant Harrison Partner +61 2 8266 1986 grant.harrison@pwc.com

he most significant corporations, institutional investors, asset managers, private-equity firms and governments around the globe recognise RBC Capital Markets as an innovative, trusted partner with in-depth expertise in capital markets, banking and finance.

RBC Capital Markets’ established securitisation platform specialises in structuring, warehousing and distribution across the US, Canada, Europe, Asia and Australia. The firm is a leading conduit provider across multiple asset classes, and offers committed balance-sheet support for warehouse financing. Its extensive term ABS structuring and placement expertise is supported by dedicated global distribution, trading and derivatives capabilities.

◆ CONTACT DETAILS

Jennifer Hellerud Director and Head of Securitisation +61 2 9033 3238 jennifer.hellerud@rbccm.com www.rbccm.com

Simone Johnson Vice President, Securitisation +61 2 9033 3360 simone.johnson@rbccm.com

55

MEMBER PROFILES

SARGON

SOCIETE GENERALE

O

S

◆ CONTACT DETAILS

◆ CONTACT DETAILS

perating across Australia, New Zealand and Hong Kong, Sargon has assembled a team with deep industry and technology expertise to reimagine how trusts can be serviced in a dynamic, highly regulated environment. Sargon provides a full range of trustee and agency services to the debt capital markets including securitisation, syndicated loans and other debt financing.

Through its trustee cloud infrastructure, Sargon brings together a unique combination of modern technology, financial licences and industry experts to help you focus on your clients, investors and growth.

Yvonne Kelaher Head of Corporate Trust +61 2 9053 2239 yvonne.kelaher@sargon.com www.sargon.com

ociete Generale is one of the Eurozone’s leading financial groups, offering a wide range of advisory services and tailored financial solutions.

Societe Generale has been present in Australia since 1981, providing financing, advisory and global-markets solutions. Its asset-backed-products division brings together primary markets, sectoral expertise, securitisation and structuring capabilities, secondary trading, distribution channels and debt-securities financing. This enables Societe Generale better to leverage its credit capabilities and to be a single-entry point for ABS-type products and illiquid loans in support of issuer and investor clients.

Arkady Lippa Managing Director and Head of Asset Backed Products Australia +61 2 9210 8132 arkady.lippa@sgcib.com www.wholesale.banking.societegenerale.com/en/

S&P GLOBAL RATINGS

WESTPAC INSTITUTIONAL BANK

S

W

◆ CONTACT DETAILS

◆ CONTACT DETAILS

&P Global Ratings (S&P) is the world’s leading provider of independent credit ratings. Its ratings are essential to driving growth, providing transparency and helping educate market participants so they can make decisions with confidence.

S&P has more than a million credit ratings outstanding.

It offers an independent view of the market built on a unique combination of broad perspective and local insight. S&P provides opinions and research that helps market participants gain independent information to help support the growth of transparent, liquid debt markets worldwide.

S&P Global Ratings is a division of S&P Global, which provides essential intelligence for individuals, companies and governments to make decisions with confidence.

Paul Potter Director, Market Outreach – Pacific +61 2 9255 9839 paul.potter@spglobal.com www.spglobal.com/ratings 56 · Australian Securitisation Journal | Issue 17_2020

estpac Institutional Bank (WIB) delivers a broad range of financial products and services to commercial, corporate, institutional and government customers with connections to Australia and New Zealand. WIB operates through dedicated industry-relationship and specialist-product teams, with expert knowledge in financing, transactional banking, financial and debt capital markets.

Customers are supported throughout Australia as well as via branches and subsidiaries located in New Zealand, the US, UK and Asia. WIB is also responsible for Westpac Pacific. WIB works in an integrated way with all the group’s divisions in the provision of more complex financial needs, including across FX and fixed-interest solutions.

Craig Parker Executive Director and Head of Structured Finance +61 2 8254 9116 cparker@westpac.com.au www.westpac.com.au/corporate-banking/

ISSUER PROFILES

ANZ BANKING GROUP

AMP BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

YES

AUSTRALIAN ADI

PROGRESS

SECURITISATION PROGRAMME NAME

U SE OF S E C UR IT IS ATI O N TYPE OF SECURITISATION ISSUED

AUSTRALIAN FINANCE GROUP YES

AUSTRALIAN ADI

NO

KINGFISHER

SECURITISATION PROGRAMME NAME

AFG

USE OF SE CURI T I SAT I ON

U S E O F S ECURI T I SAT I ON PRIME RMBS

TYPE OF SECURITISATION ISSUED

PRIME RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

TYPE OF SECURITISATION ISSUED

PRIME RMBS

22%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

2.3%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

53%

NUMBER OF SECURITISATIONS ISSUED

23

NUMBER OF SECURITISATIONS ISSUED

6

NUMBER OF SECURITISATIONS ISSUED

7

TOTAL VOLUME ISSUED

A$21BN

TOTAL VOLUME ISSUED

A$8BN

TOTAL VOLUME ISSUED

A$2.4BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

79% DOMESTIC 21% OFFSHORE

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

57% DOMESTIC 43% OFFSHORE

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$4.7BN

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2.4BN*

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$1.1BN

F

ormed in 1849, AMP Group is Australia and New Zealand’s leading independent wealth- management company, with an expanding international investment-management business and a growing retail-banking business in Australia.

AMP Bank is an Australian retail bank participating in residentialmortgage lending, and retail and platform deposits. AMP Bank’s mission is to help customers with their goals for life, providing targeted retail-banking solutions focused on wealth creation.

AMP Bank also provides financing to AMP’s financial-planning businesses.

AMP Bank’s products and services enable AMP Group to be relevant over a wider set of financial goals, earlier in the customer’s life cycle and with higher customer interaction. AMP Bank distributes its solutions directly and by leveraging AMP Group’s advice network and brokers. ◆ please contact:

Gwenneth O’Shea Head of Securitisation +61 2 9257 5823 gwenneth_oshea@amp.com.au www.amp.com.au/securitisation

* Excluding internal securitisations. Reported values are based on initial amounts securitised at the time of each securitisation. As at 24 August 2019.

A

NZ Banking Group (ANZ) is one of the four major banking groups headquartered in Australia.

ANZ provides a broad range of banking and financial products and services to retail, small-business, corporate and institutional clients in Australia, New Zealand and the AsiaPacific region.

The bank began its Australian operations in 1835, its New Zealand operations in 1840 and has been active in Asia since the 1960s.

◆ please contact:

Scott Gifford Head of Debt Investor Relations +61 3 8655 5683 scott.gifford@anz.com Mostyn Kau Head of Group Funding +61 3 8655 3860 mostyn.kau@anz.com John Needham Head of Structured Funding +61 2 8037 0670 john.needham@anz.com www.anz.com

A

ustralian Finance Group (AFG) is one of Australia’s leading financial-solutions companies.

Founded in 1994, AFG has grown to become one of the largest mortgagebroking groups in Australia with a loan book of more than A$155 billion. Listed on the Australian Securities Exchange in 2015, AFG has in excess of 2,975 brokers across Australia, distributing more than 4,000 finance products supplied by AFG’s panel of more than 50 lenders.

AFG leverages its tier-one technology platform proactively to manage its relationship with lenders, brokers and customers. AFG commenced offering its own securitisable home loans in 2007.

These loans are funded by multiple warehouses and term transactions.

◆ please contact:

Damian Percy Securities General Manager +61 419 818 054 damian.percy@afgonline.com.au Toni Blundell Manager, Securitisation +61 404 817 417 toni.blundell@afgonline.com.au www.afgonline.com.au 57

ISSUER PROFILES

AUSWIDE BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

AVANTI

YES

AUSTRALIAN ADI

ABA TRUST

SECURITISATION PROGRAMME NAME

NO

AUSTRALIAN ADI

YES

AVANTI RMBS

SECURITISATION PROGRAMME NAMES

REDS (RMBS), REDS EHP (ABS), IMPALA (ABS)

U S E O F SE CURI T I SAT I ON

U S E OF S E C UR IT IS A TI O N PRIME RMBS

TYPE OF SECURITISATION ISSUED

52%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

NUMBER OF SECURITISATIONS ISSUED

TYPE OF SECURITISATION ISSUED

BANK OF QUEENSLAND

RMBS

USE OF SE CURI T I SAT I ON TYPES OF SECURITISATION ISSUED

PRIME RMBS, ABS

30%

9%

13

NUMBER OF SECURITISATIONS ISSUED

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

2

A$3.7BN

TOTAL VOLUME ISSUED

NZ$400M

NUMBER OF SECURITISATIONS ISSUED

43

TOTAL VOLUME ISSUED TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

TOTAL VOLUME ISSUED

A$26.4BN EQUIVALENT

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$332M

OUTSTANDING VOLUME OF SECURITISED ISSUES

NZ$295M

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

93% DOMESTIC 7% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$4.6BN

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

A

uswide Bank is an Australian regulated ADI with its head office in Bundaberg, Queensland.

Auswide Bank is listed on the ASX. It operates 21 branches from Townsville in north Queensland to Brisbane in the south east. Auswide Bank has extensive operations across the rest of Australia via third-party introducers.

Auswide Bank has Australian credit and financial-services licences issued by ASIC. As an ADI, it is supervised by APRA. The bank offers a range of personaland business-banking products and services issued directly or in partnership with leading service providers via branches, strategic relationships, and online and digital channels.

A

vanti Finance (Avanti) has been active in the New Zealand market for 30 years, providing a broad range of consumer- and businessloan solutions. The company has a long history of mortgage lending as well as providing motor-vehicle finance, personal loans and SME loans through its Avanti and GetCapital brands.

More recently, Avanti acquired the Branded Financial Services businesses in New Zealand and Australia, increasing its presence in first-tier motor-vehicle lending. This acquisition will assist Avanti’s strategy of spanning the tierone and tier-two segments in its chosen markets, expediting its progress to becoming a full-service nonbank offering for New Zealanders.

B

ank of Queensland (BOQ) is a public company incorporated with limited liability under the laws of Australia. BOQ is domiciled in Australia, is listed on the Australian Securities Exchange and is regulated

by APRA as an ADI. At 31 August 2019, the bank had total assets under management of A$56 billion.

◆ please contact:

◆ please contact:

Dale Hancock Group Treasurer +61 7 4150 4025 dhancock@auswidebank.com.au www.auswidebank.com.au 58 · Australian Securitisation Journal | Issue 17_2020

◆ please contact:

Paul Jamieson Group Treasurer +64 9 922 0272 paul.jamieson@avantifinance.co.nz www.avantifinance.co.nz

Tim Ledingham Treasurer +61 7 3212 3342 tim.ledingham@boq.com.au James Shaw Head of Funding +61 7 3212 3835 james.shaw@boq.com.au www.boq.com.au

BEYOND BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

BLUESTONE GROUP

CITI AUSTRALIA

YES

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

YES

BARTON

SECURITISATION PROGRAMME NAMES

SAPPHIRE, EMERALD

SECURITISATION PROGRAMME NAMES

SAMT, CITI CARDS AUSTRALIA MASTER TRUST

U S E O F S ECURI T I SAT I ON

USE OF S E C UR IT IS AT I O N TYPE OF SECURITISATION ISSUED

PRIME RMBS

TYPES OF SECURITISATION ISSUED

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

RMBS, REVERSE MORTGAGE

>95%

86%

NUMBER OF SECURITISATIONS ISSUED

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

3* A$1.1BN

NUMBER OF SECURITISATIONS ISSUED

29

TOTAL VOLUME ISSUED

TOTAL VOLUME ISSUED

A$8.8BN EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

92% DOMESTIC 8% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2.2BN EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$494M

*Excluding internal securitisation

B

eyond Bank is one of the largest customer-owned banks in Australia. It has more than 240,000 customers and more than 40 branches across NSW, SA, WA and the ACT. At the end of June 2019, its total assets were A$6.2 billion.

Beyond Bank has a long history of returning value to customers and their communities. It aims to help customers and communities achieve social, economic and environmental sustainability. The bank’s profits are used to develop products and services that meet the needs of customers and more than 9 per cent of profits after tax are reinvested into the community.

As Australia’s first bank to be certified as a B Corp, the bank has met the highest standards in performance, transparency and accountability. ◆ please contact:

Tony MacGillivray Treasurer +61 8 8205 8853 tmacgillivray@beyondbank.com.au Kyle Schroeder Senior Securitisation Analyst +61 8 8205 8781 kschroeder@beyondbank.com.au www.beyondbank.com.au

B

luestone Group (Bluestone) provides near-prime and specialist mortgage solutions to borrowers falling outside bank criteria.

Established in Sydney in 2000, Bluestone has grown to become a significant nonbank lender, employing more than 250 staff and managing in excess of A$9.9 billion in loans.

In March 2018, entities associated with Cerberus Capital Management completed a transaction to purchase Bluestone’s Asia-Pacific operations. The executive-management team of the Asia-Pacific business continues to run operations with additional management positions added to support growth. The investment will see Bluestone have an increased focus on prime and near-prime borrowers and, in the longer term, move into other loan products. ◆ please contact:

Campbell Smyth Chief Executive Officer +61 2 8115 5167 campbell.smyth@bluestone.com.au Todd Lawler Chief Financial Officer +61 407 073 537 todd.lawler@bluestone.com.au www.bluestone.com.au

USE OF SE CURI T I SAT I ON TYPES OF SECURITISATION ISSUED

PRIME RMBS, CREDIT-CARD ABS

NUMBER OF SECURITISATIONS ISSUED

34

TOTAL VOLUME ISSUED

A$13.8BN

CURRENCIES ON ISSUE

AUD

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$3.3BN

A

s part of one of the world’s largest financial-services companies with a presence in nearly 100 countries, Citi Australia has been providing financial services to Australian consumers, corporations, institutions and governments for more than 30 years.

Citi Australia has been servicing and managing asset-backed portfolios since 1995. As of the end of June 2019, Citi had an A$8.1 billion portfolio of Australian mortgage assets and a A$4.9 billion portfolio of Australian credit-card assets, with around 25% of these assets securitised.

There have been 15 issues from the SAMT programme, 18 from the legacy Compass Master Trust programme and one from the Citi Card Australia Master Trust programme. The SAMT structure is an active programme that has been in operation since 2003. ◆ please contact:

Charles Finkelstein Country Treasurer +61 2 8225 6096 charles.finkelstein@citi.com William Mortimer Head of Securitised Products, Australia and New Zealand +61 2 8225 2503 william.mortimer@citi.com www.citi.com/australia 59

ISSUER PROFILES

COLUMBUS CAPITAL COMMONWEALTH CREDIT UNION BANK OF AUSTRALIA AUSTRALIA AUSTRALIAN ADI SECURITISATION PROGRAMME NAMES

NO

AUSTRALIAN ADI

TRITON, VERMILION

SECURITISATION PROGRAMME NAME

U S E OF S E C UR IT IS A T I O N

YES

AUSTRALIAN ADI

YES

MEDALLION

SECURITISATION PROGRAMME NAME

HARVEY

U S E O F SE CURI T I SAT I ON

USE OF SE CURI T I SAT I ON

TYPES OF SECURITISATION ISSUED

PRIME RMBS, NONRESIDENT RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

55%

NUMBER OF SECURITISATIONS ISSUED

13

TOTAL VOLUME ISSUED

TOTAL VOLUME ISSUED

A$5.2BN EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

97% DOMESTIC 3% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$12.8BN

OUTSTANDING VOLUME OF SECURITISED ISSUES

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2.6BN EQUIVALENT

C

olumbus Capital was established in 2006 as a nonbank wholesale funder. The business was subsequently bought out by its founders and is now 100% Australian owned. It is one of the few nonbanks that has not been acquired by private equity or listed on the ASX. The company offers an extensive range of white-label home-loan products via strategic relationships and its online channel, focused solely on the prime mortgage space. It also offers third-party servicing capabilities covering homeloan, consumer-finance, and commercial ABS products.

In 2012, Columbus Capital acquired Origin Mortgage Management Services from ANZ Banking Group. The recent Vermilion programme specialising in nonresident loans, while small in size compared with the main business, complements and assists growth plans. ◆ please contact:

Andrew Chepul Chief Executive +61 2 9273 8102 andrew.chepul@colcap.com.au www.colcap.com.au 60 · Australian Securitisation Journal | Issue 17_2020

TYPE OF SECURITISATION ISSUED

PRIME RMBS

TYPE OF SECURITISATION ISSUED

PRIME RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

7%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

52%

NUMBER OF SECURITISATIONS ISSUED

26

NUMBER OF SECURITISATIONS ISSUED

11

A$65.3BN

TOTAL VOLUME ISSUED

A$6.6BN 100% DOMESTIC A$2BN

C

ommonwealth Bank of Australia is Australia’s leading provider of integrated financial services.

These include retail, premium, business and institutional banking, and funds-management, superannuation, insurance, investment and share-broking products and services.

The bank’s approach to wholesale funding is to remain diversified across markets and to maintain a degree of flexibility around transaction timing.

Wholesale funding is complemented by securitisation issues through the Medallion programme.

◆ please contact:

Ed Freilikh Executive Manager, Group Funding +61 2 9118 1337 edward.freilikh@cba.com.au www.commbank.com.au/ groupfunding

C

redit Union Australia (CUA) is Australia’s largest credit union, contributing to the financial wellbeing of almost 549,500 Australians through its banking, insurance and health insurance services. CUA’s history dates to 1946 and the formation of the Catholic Thrift and Loan Co-operative. Since then, the company has grown its national footprint across four states following the amalgamation of more than 171 different credit unions.

As a mutual, CUA was created by members for members. Its ongoing growth and success enables the reinvestment of profits back into the business to improve the member experience and build stronger communities.

CUA is an ADI under the Banking Act and has an Australian financial services license and an Australian credit license granted by ASIC. ◆ please contact:

Tim Moore Treasurer +61 7 3552 4096 tim.moore@cua.com.au www.cua.com.au

FIRSTMAC

FLEXIGROUP

IMB BANK

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

YES

SECURITISATION PROGRAMME NAME

FIRSTMAC MORTGAGE FUNDING TRUST

SECURITISATION PROGRAMME NAMES

FLEXI ABS, Q CARD TRUST

SECURITISATION PROGRAMME NAME

ILLAWARRA

USE OF S E C UR IT IS AT I O N TYPE OF SECURITISATION ISSUED

PRIME RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

73%

NUMBER OF SECURITISATIONS ISSUED

43

TOTAL VOLUME ISSUED

A$25.5BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

92% DOMESTIC 8% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$8.6BN

F

irstmac is a leading nonbank provider of prime home loans to the Australian market. It has funded in excess of 100,000 home loans from the inception of its lending programme in 2002. Firstmac provides consumers with an extensive selection of home-loan products which are available via thirdparty loan introducers and online under www.loans.com.au, Firstmac’s retail brand.

Firstmac is a regular RMBS issuer.

It is currently among the top-10 issuers by volume in Australia, with average annual issuance of approximately A$2.4 billion over the past six years. Firstmac has also diversified its business to include motor-vehicle financing and a managed-investment-fund offering.

◆ please contact:

James Austin Chief Financial Officer +61 7 3017 8883 james.austin@firstmac.com.au Paul Eagar Director, Securitisation +61 2 8579 8403 paul.eagar@firstmac.com.au www.firstmac.com.au

U S E O F S ECURI T I SAT I ON

USE OF SE CURI T I SAT I ON TYPES OF SECURITISATION ISSUED

PRIME RMBS, SMALL-TICKET CMBS

20

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

47%

TOTAL VOLUME ISSUED

A$3.8BN EQUIVALENT

NUMBER OF SECURITISATIONS ISSUED

7 RMBS, 3 CMBS

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

>70% DOMESTIC

TOTAL VOLUME ISSUED

A$3.6BN

A$1BN EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$324M

TYPE OF SECURITISATION ISSUED

ABS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

44%

NUMBER OF SECURITISATIONS ISSUED

OUTSTANDING VOLUME OF SECURITISED ISSUES

F

lexigroup provides a diverse range of finance solutions to consumers and businesses through a network of retail and business partners. Its products are designed to make a richer, fuller life available to everyone through its buy-now, pay-later product (humm) its credit cards and its consumer- and business-leasing offering. Flexigroup has partnerships with more than 65,000 retailers and now serves 1.7 million customers across Australia, New Zealand and Ireland.

In Australia, flexigroup has been a regular ABS issuer under its Flexi ABS programme. In 2016, it was the first Australian corporate to issue green ABS certified by the Climate Bonds Initiative. In New Zealand, flexigroup is a frequent issuer under its Q Card Trust programme. ◆ please contact:

Michael Malone Group Treasurer +61 2 8905 2175 michael.malone@flexigroup.com.au Bianca Spata Head of Group Funding +61 2 8905 2625 bianca.spata@flexigroup.com.au www.flexigroup.com.au

E

stablished in 1880, IMB Bank (IMB) has been helping people achieve their financial goals for 139 years.

It does this by offering competitive products, practical solutions and, thanks to a dual focus on person-toperson relationships and technological innovation, superior customer service.

IMB provides a fully-featured range of banking solutions: home and personal lending, savings and transaction accounts, term deposits, business banking and access to financial planning. A selection of insurance and travel products is also available.

IMB is regulated by APRA and ASIC. It is a member of the Customer Owned Banking Association. IMB has around 200,000 members and total assets in excess of A$6.1 billion. ◆ please contact:

Mark Workman Treasurer +61 2 4298 0172 mark.workman@imb.com.au Ian Witheridge Senior Manager, Finance +61 2 4298 0256 ian.witheridge@imb.com.au www.imb.com.au 61

ISSUER PROFILES

ING BANK (AUSTRALIA) LA TROBE FINANCIAL LATITUDE FINANCIAL SERVICES AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

YES

AUSTRALIAN ADI

NO

IDOL

SECURITISATION PROGRAMME NAME

LA TROBE FINANCIAL CAPITAL MARKETS

US E OF S E C UR IT IS A TI O N TYPE OF SECURITISATION ISSUED

PRIME RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

13%

NUMBER OF SECURITISATIONS ISSUED

11

TOTAL VOLUME ISSUED

A$10.2BN EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

99% DOMESTIC 1% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2BN

I

NG – the trading name of ING Bank (Australia) – is part of the world’s leading direct bank and is wholly owned by ING Group. It offers retail mortgages, transactional banking, retail savings, credit cards, personal loans, specialised commercial-property products and retail superannuation.

With more than A$47 billion in retail and business deposits, A$50 billion in retail mortgages and two million customers, ING is the fifth-largest home lender in Australia.

U S E O F SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

68%

NUMBER OF SECURITISATIONS ISSUED

Peter Casey Deputy Treasurer +61 2 9018 5132 peter.casey@ing.com.au Samuel Rodgers Treasury Dealer +61 2 9028 4241 samuel.rodgers@ing.com.au www.ing.com.au 62 · Australian Securitisation Journal | Issue 17_2020

NO

SECURITISATION PROGRAMME NAMES

LATITUDE AUSTRALIA CREDIT CARD MASTER TRUST, LATITUDE AUSTRALIA PERSONAL LOANS TRUST, LATITUDE NEW ZEALAND CREDIT CARD MASTER TRUST

USE OF SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

ABS

9

NUMBER OF SECURITISATIONS ISSUED

6 A$3.6BN

A$4.9BN

TOTAL VOLUME ISSUED

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$3.5BN

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$3.4BN

TOTAL VOLUME ISSUED

L

a Trobe Financial is a leading nonbank financial institution offering specialist mortgage-lending products and wealth-management solutions. The company specialises in originating, underwriting and managing granular secured first-lien mortgage assets. These are residential- and commercial-mortgage loans.

The business has A$10 billion of assets under management, more than 400 staff and has offices in Melbourne, Sydney, Shanghai and Hong Kong. La Trobe Financial has helped more than 140,000 individuals obtain mortgage finance and has a strategic partnership with Blackstone Group. ◆ please contact:

◆ please contact:

AUSTRALIAN ADI

Martin Barry Chief Treasurer and Strategy Officer +61 2 8046 1502 mbarry@latrobefinancial.com.au David Bleakley Chief Settlements Officer +61 3 8610 2831 dbleakley@latrobefinancial.com.au Richard Parry Head of Group Portfolio Management +61 3 8610 2847 rparry@latrobefinancial.com.au www.latrobefinancial.com

L

atitude Financial Services is a leading digital-payments, instalments and lending platform in Australia and New Zealand, with 2.6 million open customer accounts and A$7.7 billion of receivables at 30 June 2019. The company offers products including credit cards, personal loans, motor loans, insurance, and interestfree promotional and retail offers. The business employs more than 1,600 staff across Australia and New Zealand, and services its customers through retailers, brokers, phone and internet.

The company offers financing solutions for retail partners, managing credit applications and authorisation, billing, remittance and customerservice processing. Its products include LatitudePay, Gem Visa, GO MasterCard and 28 Degrees Platinum MasterCard. ◆ please contact:

Eva Zileli Treasurer +61 417 327 643 eva.zileli@latitudefinancial.com Gus Carfi Head of Funding +61 466 827 155 gus.carfi@latitudefinancial.com www.latitudefinancial.com.au

LIBERTY FINANCIAL AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

NO

AUSTRALIAN ADI

YES

LIBERTY

SECURITISATION PROGRAMME NAMES

PUMA, SMART

USE OF S E C UR IT IS ATI O N TYPES OF SECURITISATION ISSUED

ABS, CMBS, RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

74%

NUMBER OF SECURITISATIONS ISSUED

56

TOTAL VOLUME ISSUED

A$26BN+ EQUIVALENT

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

90% DOMESTIC 10% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

>A$8.6BN EQUIVALENT

L

iberty Financial (Liberty) is a mainstream speciality-finance group that champions free thinking. Since 1997, Liberty has helped more than 350,000 customers “get financial”.

Liberty provides a suite of products and services. This comprises home, car, commercial, SMSF and personal loans, and investment and deposit products.

It also offers consumer credit-insurance products via LFI Group and ALI Group.

Liberty has raised more than A$26 billion in domestic and international capital markets across 56 transactions.

Liberty is also Australia’s only investment-grade rated nonbank issuer (BBB-, outlook stable by S&P). It is also one of only a few lenders with an unblemished capital-markets record with no rating downgrades or chargeoffs ever experienced by its securitisation programme.

◆ please contact:

Peter Riedel Chief Financial Officer +61 3 8635 8888 priedel@liberty.com.au www.liberty.com.au

MACQUARIE GROUP

M

acquarie Securitisation (manager of the PUMA RMBS and SMART ABS programmes) is a wholly owned subsidiary of Macquarie Bank, which is a regulated authorised deposit-taking institution and part of the Macquarie Group.

Macquarie Group is a global diversified financial group providing clients with asset- management and finance, banking, advisory, and risk and capital solutions across debt, equity and commodities. Founded in 1969, Macquarie Group now employs more than 15,000 people in 30 markets around the globe. At 31 March 2019, the group had total assets under management of A$551 billion.

Macquarie Group is listed in Australia and is regulated by APRA as the owner of Macquarie Bank.

PUMA PROGRAMME USE OF SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

PRIME RMBS

NUMBER OF SECURITISATIONS ISSUED

62

TOTAL VOLUME ISSUED

A$58BN EQUIVALENT

CURRENCIES ON ISSUE

AUD

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$6.1BN EQUIVALENT

SMART PROGRAMME USE OF SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

ABS

NUMBER OF SECURITISATIONS ISSUED

35

TOTAL VOLUME ISSUED

A$28BN EQUIVALENT

CURRENCIES ON ISSUE

USD, AUD, EUR

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2.7BN EQUIVALENT

◆ please contact:

Daniel McGrath Division Director, BFS Funding +61 2 8232 7083 daniel.mcgrath@macquarie.com Raymond Lam Associate Director, BFS Funding +61 2 8237 3755 raymond.lam@macquarie.com Craig Eggleton Associate Director, Group Treasury Funding +61 2 8232 4267 craig.eggleton@macquarie.com David Tay Senior Manager, Group Treasury Funding +61 2 8237 2747 david.tay@macquarie.com www.macquarie.com 63

ISSUER PROFILES

ME AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

MTF FINANCE

MORTGAGE HOUSE

YES

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

NO

SMHL

SECURITISATION PROGRAMME NAME

MTF

SECURITISATION PROGRAMME NAMES

MORTGAGE HOUSE CAPITAL MORTGAGE TRUST

US E OF S E C UR IT IS A T I O N TYPE OF SECURITISATION RMBS ISSUED NUMBER OF SECURITISATIONS 49 ISSUED TOTAL VOLUME ISSUED A$49.5BN EQUIVALENT TOTAL DOMESTIC VS A$31.8BN, US$10.4BN, OFFSHORE ISSUANCE €2.2BN OUTSTANDING VOLUME A$4.8BN OF SECURITISED ISSUES * Combined Members Equity Bank and historical mortgageorigination business.

M

E was created 25 years ago to provide low-cost home loans and banking products to members of industry superannuation funds and unions. ME’s new brand represents a modern, strong, innovative and secure bank in the digital era.

ME is 100% owned by 26 industry super funds, which created the bank to help all Australians get ahead. ME has opened its product offering to the broader Australian population and it is committed to providing straightforward products. ME has a philosophy of supporting, educating and empowering its customers to achieve their financial objectives.

◆ please contact:

John Caelli Treasurer +61 3 9708 3825 john.caelli@mebank.com.au Sid Mamgain Senior Manager, Secured Funding +61 3 9708 3747 sid.mamgain@mebank.com.au Magda Aly Manager, Securitisation +61 3 9708 3275 magda.aly@mebank.com.au www.mebank.com.au 64 · Australian Securitisation Journal | Issue 17_2020

U S E O F SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

ABS

NUMBER OF SECURITISATIONS ISSUED

5

TOTAL VOLUME ISSUED

NZ$1BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

NZ$540M

M

TF Finance was formed in 1970 to enable selected New Zealand dealers to finance sales of motor vehicles to the public. MTF Finance is one of New Zealand’s largest motor-vehicle financiers, operating in all major centres from Kaitaia to Invercargill.

MTF Finance originators come from a network of more than 150 dealers selling motor vehicles and motorcycles in conjunction with financial services, and 46 MTF Finance franchises that only sell financial services. Each originator participates in the profit of the business in proportion to the volume of origination written. This provides a compelling financial interest in the quality of business originated and ensures the ongoing success of MTF Finance.

◆ please contact:

Jason Hughes Securitisation Manager +64 3 474 6381 jhughes@mtf.co.nz Kyle Cameron Chief Financial Officer +64 3 474 6381 kcameron@mtf.co.nz www.mtf.co.nz

USE OF SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

RMBS

NUMBER OF SECURITISATIONS ISSUED

1

TOTAL VOLUME ISSUED

A$300M

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$270M

M

ortgage House is one of Australia’s leading, growing and independent retail nonbank lenders, with 25,000 customers and more than A$3.1 billion of funds under management. The group was established in 1986 by its chief executive, Ken Sayer, initially as a broker to various banks and lending institutions for the origination of residential housing loans. It has evolved into providing white-label Mortgage House branded loans and, through the launch of the Mortgage House Capital Mortgage Trust, originating its own mortgages under the Mortgage House brand.

Today, the company predominantly originates prime residential mortgages.

It has secured business and industry awards for excellence in product development, digital transformation and customer service. ◆ please contact:

Steven Mixter Head of Securitisation and Structured Finance +61 2 8116 1068 stevenm@mortgagehouse.com.au Richard Pearson Chief Financial Officer +61 2 8116 1004 richardp@mortgagehouse.com.au www.mortgagehouse.com.au

MYSTATE BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME

NATIONAL AUSTRALIA BANK YES

AUSTRALIAN ADI

CONQUEST

SECURITISATION PROGRAMME NAME

USE OF S E C UR IT IS AT I O N TYPE OF SECURITISATION ISSUED

YES

AUSTRALIAN ADI

YES

NATIONAL RMBS

SECURITISATION PROGRAMME NAME

LIGHT

USE OF SE CURI T I SAT I ON

U S E O F S ECURI T I SAT I ON

TYPE OF SECURITISATION ISSUED

PRIME RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

79%

NUMBER OF SECURITISATIONS ISSUED

8

A$4.3BN

TOTAL VOLUME ISSUED

A$3.7BN

7

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$1.6BN

PRIME RMBS

TYPE OF SECURITISATION ISSUED

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

82%

NUMBER OF SECURITISATIONS ISSUED

7 EXTERNAL RMBS

NUMBER OF SECURITISATIONS ISSUED

8 EXTERNAL RMBS

TOTAL VOLUME ISSUED

APPROX. A$19.6BN (EXCLUDES RETAINED DEALS)

OUTSTANDING VOLUME OF SECURITISED ISSUES TOTAL CROSS-BORDER TRANCHES ISSUED

TOTAL VOLUME ISSUED TOTAL DOMESTIC VS OFFSHORE ISSUANCE OUTSTANDING VOLUME OF SECURITISED ISSUES

A$2.7BN 100% DOMESTIC

PRIME RMBS

A$1.1BN

M

yState Bank is a wholly owned subsidiary of MyState Limited – a national diversified financialservices group headquartered in Tasmania. With a customer-centric culture, MyState Bank offers banking, lending and insurance services across Australia.

MyState Bank’s loan portfolio is in excess of A$5 billion and is sourced directly via its branch network in Tasmania and central Queensland, as well as Australia-wide via its digital presence and broker network. MyState Bank also sources deposits via branch and digital channels. MyState Bank is an ADI and is regulated by APRA.

◆ please contact:

Ryan Sharp Treasurer +61 3 6215 9554 ryan.sharp@mystate.com.au Susan Castley Structured Finance Analyst +61 3 6215 9552 susan.castley@mystate.com.au www.mystate.com.au

PEOPLE’S CHOICE CREDIT UNION

N

ational Australia Bank (NAB) is a major financial-services organisation in Australia and New Zealand. It has more than 30,000 people serving nine million customers at more than 900 locations in Australia, New Zealand and around the world.

As Australia’s largest business bank, NAB works with small, medium and large businesses. The bank is there from the beginning to support customers through every stage of the business lifecycle.

NAB funds some of the most important infrastructure in its communities including schools, hospitals and roads. The bank does so in a way that is responsible, inclusive and innovative.

◆ please contact:

Paul Duns Director, Group Funding +61 3 8634 2700 paul.duns@nab.com.au Sarah Samson Head of Securitisation Origination +61 3 8641 2997 sarah.samson@nab.com.au www.nab.com.au

A

ustralian Central Credit Union, trading as People’s Choice Credit Union (People’s Choice), is one of Australia’s largest credit unions, with more than A$10.7 billion of total assets under management and advice.

People’s Choice has more than 376,000 members serviced through locations in SA, NT, Victoria, WA and the ACT. People’s Choice is an ADI, is subject to prudential supervision under Australia’s Banking Act and is regulated

by APRA.

◆ please contact:

Paul Farmer Manager Treasury +61 8 8305 1898 pfarmer@peopleschoicecu.com.au Heather Gale Treasurer +61 8 8305 1829 hgale@peopleschoicecu.com.au www.peopleschoicecu.com.au 65

ISSUER PROFILES

PEPPER

P&N BANK

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

AUSTRALIAN SECURITISATION PROGRAMME NAMES

PEPPER RESIDENTIAL SECURITIES (PRS), PEPPER PRIME, PEPPER I-PRIME, SPARKZ

SECURITISATION PROGRAMME NAME

TYPE OF SECURITISATION ISSUED

TYPES OF SECURITISATION RMBS, ABS ISSUED NUMBER OF SECURITISATIONS 24 PRS, 5 PEPPER I-PRIME, 1 SPARKZ ISSUED* TOTAL VOLUME ISSUED* A$17.9BN EQUIVALENT TOTAL DOMESTIC VS 76% DOMESTIC OFFSHORE ISSUANCE* 24% OFFSHORE *Australian platform issuance only.

E

YES

AUSTRALIAN ADI

NO

PINNACLE

SECURITISATION PROGRAMME NAME

REDZED

USE OF SE CURI T I SAT I ON

U S E O F SE CURI T I SAT I ON

US E OF S E C UR IT IS A T I O N

stablished in 2001, Pepper Group (Pepper) is a leading Australianheadquartered financial-services group with businesses in Australia, Asia and Europe encompassing lending and asset servicing.

In Australia, Pepper’s asset originations include prime and nonconforming mortgages, auto and equipment receivables, and small-ticket commercial real estate. In New Zealand, the firm originates residential mortgages.

Pepper is a third-party servicer and asset manager across a range of asset classes. It had more than A$75 billion in assets under management globally at 30 June 2019.

REDZED LENDING SOLUTIONS

PRIME RMBS

TYPE OF SECURITISATION ISSUED

RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

35%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

64%

NUMBER OF SECURITISATIONS ISSUED

2

NUMBER OF SECURITISATIONS ISSUED

7

TOTAL VOLUME ISSUED

A$650M

TOTAL VOLUME ISSUED

A$1.7BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

94% DOMESTIC 6% OFFSHORE

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$273M

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$900M

P

&N Bank (P&N) is WA’s largest locally owned and managed bank.

Operating under a customerowned model, P&N’s primary focus is its 96,000-plus members. P&N aims to provide a genuine banking alternative for people who value competitive and convenient banking products, outstanding customer service and community spirit.

With assets in excess of A$4 billion, P&N was Australia’s eighth-largest mutual bank at the end of August 2019.

P&N is an ADI, regulated to the same high standards as the major banks by APRA, ASIC, the Australian Transaction Reports and Analysis Centre, and the Australian Competition and Consumer Commission.

R

edZed Lending Solutions (RedZed) is one of Australia’s leading lenders dedicated to providing financial solutions to Australia’s self-employed segment. The company specialises in originating, underwriting and managing residential and commercial loans with a focus on understanding the needs of the selfemployed.

Established in 2006, RedZed has helped thousands of Australian customers and originated in excess of A$3 billion in loans.

◆ please contact:

Andrew Twyford Treasurer +61 401 039 700 atwyford@pepper.com.au Steven Fischer Deputy Treasurer +61 2 9463 4648 sfischer@pepper.com.au www.pepper.com.au 66 · Australian Securitisation Journal | Issue 17_2020

◆ please contact:

Phil Webster Treasurer +61 8 9219 7561 phil.webster@pnbank.com.au www.pnbank.com.au

◆ please contact:

Chris Wilson Chief Financial Officer +61 3 9605 3500 cwilson@redzed.com www.redzed.com

RESIMAC

SUNCORP GROUP

AUSTRALIAN ADI

NO

AUSTRALIAN ADI

SECURITISATION PROGRAMME NAMES

PREMIER, BASTILLE, AVOCA, VERSAILLES

SECURITISATION PROGRAMME NAME

USE OF S E C UR IT IS AT I O N

THINKTANK

YES

AUSTRALIAN ADI

NO

APOLLO

SECURITISATION PROGRAMME NAME

THINK TANK

USE OF SE CURI T I SAT I ON

U S E O F S ECURI T I SAT I ON PRIME RMBS

TYPE OF SECURITISATION ISSUED

CMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

16.4%

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

67%

48

NUMBER OF SECURITISATIONS ISSUED

23

NUMBER OF SECURITISATIONS ISSUED

5

TOTAL VOLUME ISSUED

A$29BN EQUIVALENT

TOTAL VOLUME ISSUED

A$26.5BN EQUIVALENT

TOTAL VOLUME ISSUED

A$1.4BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

58% DOMESTIC 42% OFFSHORE

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

81% DOMESTIC 19% OFFSHORE

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$7BN EQUIVALENT

OUTSTANDING VOLUME OF SECURITISED ISSUES

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$836M

A$3.8BN

TYPES OF SECURITISATION ISSUED

RMBS, NIM BOND

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

100%

NUMBER OF SECURITISATIONS ISSUED

R

esimac is a leading nonbank financial institution that commenced operations in 1985.

The company offers a suite of prime and specialist lending products tailored to the residential markets in Australia and New Zealand.

Resimac’s capital-markets activities are core to its enterprise strategy and it is one of the most prolific Australian nonbank issuers. It was the first Australian RMBS issuer in 1988 and since this time has issued more than A$29 billion equivalent in 48 deals including in Europe, the US and New Zealand.

Resimac’s asset-servicing credentials are recognised by a “strong” servicer ranking from S&P.

◆ please contact:

Andrew Marsden Treasury and Securitisation +61 2 9248 6507 andrew.marsden@resimac.com.au Debbie Long Treasury and Securitisation +61 2 9248 0383 debbie.long@resimac.com.au www.resimac.com.au

TYPE OF SECURITISATION ISSUED

S

uncorp Group is a top-20 ASXlisted company with A$96 billion in assets. Suncorp is a leading financial-services provider in Australia and New Zealand, enabling more than nine million customers better to protect and enhance their financial wellbeing. The group has more than 13,000 employees in Australasia and three operational business units: banking and wealth, insurance and Suncorp New Zealand. ◆ please contact:

Simon Lewis Treasurer +61 7 3362 4037 simon.lewis@suncorp.com.au Maddalena Gowing Manager, Securitisation and Covered Bonds +61 7 3362 4038 maddalena.gowing@suncorp.com.au Christian Graham Securitisation and Covered Bond Specialist +61 7 3362 4032 christian.graham@suncorp.com.au Ally Tang Securitisation and Covered Bond Specialist +61 7 3362 4069 ally.tang@suncorp.com.au www.suncorp.com.au

T

hinktank Commercial Property Finance (Thinktank) is an independent nonbank financial institution specialising in the provision of commercial-property mortgage finance up to A$3 million and residential-property mortgage finance up to A$1.5 million in the Australian SME sector. Commencing operations in 2006, Thinktank is a programmatic issuer supported by a national distribution network and offices in Sydney, Melbourne and Brisbane.

Thinktank’s asset quality and performance is notable for conservative LVRs, low arrears and negligible loss history. Under the continued guidance of the company’s founders, growth in the loan portfolio has been measured and is strongly supported by long-term domestic and offshore institutional stakeholders. ◆ please contact:

Cullen Hughes Chief Financial Officer and Treasurer +61 2 8669 5518 chughes@thinktank.net.au Jonathan Street Chief Executive Officer +61 2 8669 5505 jstreet@thinktank.net.au www.thinktank.net.au 67

ISSUER PROFILES

WESTPAC BANKING CORPORATION AUSTRALIAN ADI

YES

SECURITISATION PROGRAMME NAMES

WST, CRUSADE ABS, CRUSADE RMBS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION1

3.7%

W

estpac Banking Corporation (Westpac) is Australia’s second-largest banking organisation and one of the largest in New Zealand. Through its unique portfolio of brands, Westpac provides a broad range of banking and financial services in these markets including retail, business and institutional banking, and wealthmanagement services.

At 31 March 2019, Westpac had total assets of A$891 billion. Westpac’s ordinary shares and certain other securities are quoted on the ASX and, at 31 March 2019, the bank’s market capitalisation was A$89 billion.

ZIP CO

WST AND CRUSADE RMBS PROGRAMMES TYPE OF SECURITISATION ISSUED NUMBER OF SECURITISATIONS ISSUED TOTAL VOLUME ISSUED TOTAL DOMESTIC VS OFFSHORE ISSUANCE2 OUTSTANDING VOLUME OF SECURITISED ISSUES

PRIME RMBS 43 APPROX. A$81.6BN

NUMBER OF SECURITISATIONS ISSUED TOTAL VOLUME ISSUED

USE OF SE CURI T I SAT I ON TYPE OF SECURITISATION ISSUED

CREDIT-CARD ABS

PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION

~65%

NUMBER OF SECURITISATIONS ISSUED

1

TOTAL VOLUME ISSUED

$500M

TOTAL DOMESTIC VS OFFSHORE ISSUANCE

100% DOMESTIC

APPROX. A$6.8BN

OUTSTANDING VOLUME OF SECURITISED ISSUES

A$500M

Z ABS 10 APPROX. A$10.3BN

TOTAL DOMESTIC VS OFFSHORE ISSUANCE2

100% DOMESTIC

OUTSTANDING VOLUME OF SECURITISED ISSUES

APPROX. A$3.1BN

1. Includes RMBS and ABS. At 31 March 2019. Residual maturity basis.

2. Based on issues currently outstanding.

◆ please contact:

Guy Volpicella Head of Structured Funding and Capital +61 2 8254 9261 gvolpicella@westpac.com.au www.westpac.com.au 68 · Australian Securitisation Journal | Issue 17_2020

ZIP MASTER TRUST

100% DOMESTIC

CRUSADE ABS PROGRAMME TYPE OF SECURITISATION ISSUED

SECURITISATION PROGRAMME NAME

ip Co (Zip) is a leading player in the digital retail-finance and payments industry. Zip provides point-of-sale credit and payment services across the retail, home, health and wellness, auto, travel and entertainment sectors, and is the owner of Pocketbook, a leading Personal Finance Management app. Pocketbook has more than 700,000 users whom it allows to budget and save by automatically categorising spending and providing smart alerts.

Zip offers customers an interestfree digital wallet via two products: up to A$1,500 with Zip Pay, and up to A$50,000 with Zip Money. Zip now has more than 1.3 million customers and is available to be used in more than 37,000 locations. Customers simply sign in to their Zip digital wallet, either online or in store, and authenticate the transaction to complete the purchase.

◆ please contact:

Martin Brooke Chief Financial Officer investors@zip.co www.zip.co

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From origination to distribution, Natixis builds on its international capabilities to support your transactions along the whole value chain

CREATIVE FINANCIAL SOLUTIONS

For more information, please contact: Oscar Austin Global Markets, Australia

Milos Ilic-Miloradovic GSCS, Australia

Fabrice Guesde Head of GSCS Asia Pacific

Tel : +61 2 8063 1711 oscar.austin@natixis.com Natixis Australia Pty Ltd Level 26, 8 Chifley Square 2000 Sydney NSW, Australia

Tel : +61 2 8063 1725 milos.ilic-miloradovic@natixis.com Natixis Australia Pty Ltd Level 26, 8 Chifley Square 2000 Sydney NSW, Australia

fabrice.guesde@natixis.com Natixis APAC Headquarters Level 72 – ICC, 1 Austin Road Kowloon, Hong Kong

www.apac.cib.natixis.com/australia

Tel : +852 3900 8451