Welcome to the Australian Securitisation Forum
Welcome to the Australian Securitisation Forum (ASF) is a broadly based professional forum through which participants in the Australian securitisation markets can advocate their common interests on important legal, regulatory, accounting and market practice issues.
ASF lodges with ASIC final draft of RMBS disclosure package
19 January 2010
As members would know, the ASF was tasked by ASIC at the beginning of last year to produce – in consultation with the industry – a reporting package for various securitisation asset classes. This implements the global initiative, Project ReSTART, as well as IOSCO so-called ‘TFUMP’ (Task Force into Unregulated Markets & Products) recommendations. Subject to final member input and ASIC opinion, the package will be going live later this year. ASIC will advise also on the manner in which compliance shall be governed. At present, its favoured approach is in the form of Regulatory Guide. ASF will throughout this year also produce reporting packages for ABS, ABCP and CMBS. It will also develop and release a standard set of Representations & Warranties for the Australian market. All of this, together with the issuer long-term economic retention requirement from IOSCO/ASIC, will seek to meet the G20 Finance Ministers’ expectations set out in January 2009 in the wake of the GFC. Click here to see the final draft of the RMBS disclosure package for issuer reporting – both pre- and post-issuance.
ASF Accounting & Tax sub-committee lodges representation to NSW OSR regarding stamp duty
12 January 2010
Read our technical request that the Loan Backed Security exemption in Section 284 of the NSW Duties Act 1997 be extended or a separate exemption be included for asset backed securities.
ECB launches consultation on loan-by-loan information for asset-backed securities
23 December 2009
The European Central Bank (ECB) is launching today a public consultation on the establishment of loan-by-loan information requirements for asset-backed securities (ABSs) in the Eurosystem collateral framework. ABSs account for an important part of the collateral that counterparties post in Eurosystem credit operations. The Eurosystem expects that this asset class, among the wide range of collateral assets that the Eurosystem currently accepts in its collateral framework, will continue to be significant in the future for Eurosystem counterparties. This loan-level information would increase transparency and would thus make an important contribution to making more informed risk assessments of ABSs and restoring the weakened confidence in the securitisation markets.
All market participants (e.g. originators, issuers, ABS servicers, rating agencies, market data providers, etc.) are invited to express their views on the ideas and questions presented in the public consultation document, available on the ECB’s website.
ASF lodges its APS120 submission in response to APRA’s Discussion Paper – delay and substance creating uncertainty
23 December 2009
The ASF submission emphasises along with many other financial market participants the dangers of introducing a liquidity regime that is tighter than our competitors, especially since it was their nor our markets that were found wanting. We note in our submission the need for a diversified portfolio of liquid assets albeit with haircuts, not one concentrated in Australian government securities; we also emphasise the need to increase APRA’s focus on the liabilities side of balance sheets, such that permitting covered bond issuance would permit ADIs to fund themselves at lower costs and with longer tenors than is currently the case.
Westpac Prices $2bn RMBS Deal
19 January 2010
By: Sonia Han | posted December 18th, 2009
Westpac priced a $2 billion RMBS, known as the Series 2009-1 WST Trust, on 18 December. Originally launched for just A$1bn on 14 December, this was the first RMBS issued by a major Australian bank since the GFC pushed structured finance deals off the radar of all banks. The $1.84 billion Class A notes comprise the second largest AAA tranche ever been launched in the Australian market. Details are:
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· Total Amount: A$2bn
· Pricing Date: 18 Dec 2009
· Settlement Date: 23 Dec 2009 |
Class A Notes
· Amount: $1.84bn
· WAL: 2.6yrs
· S&P Preliminary Rating: AAA
· Moody’s Provisional Rating: Aaa
· Credit Support: 8pct
· Coupon Margin: 1m BBSW+ 1.3pct |
Class B Notes
· Amount: $110m
· WAL: 7.6yrs
· S&P Preliminary Rating: AA
· Moody’s Provisional Rating: Aa1
· Credit Support: 2.5pct
· Coupon Margin: 1m BBSW + undisclosed |
Class C Notes
· Amount: $50m
· WAL: 7.6yrs
· Unrated
Coupon Margin: 1m BBSW + undisclosed |
ASF member, Deloitte, provides IAS update on IFRS 9 (financial instruments)
23 December 2009
On 12 November 2009, the IASB issued IFRS 9 Financial Instruments. It introduces new requirements for the classification and measurement of financial liabilities, derecognition of financial instruments, impairment and hedge accounting are expected to be added to IFRS 9 in 2010. Click here to read Deloitte’s note on the changes and the timetable.
ASF presents pre-launch version of RMBS pre- and post-issuance disclosure package to members
23 December 2009
Following the ASF’s RfC on its industry initiative to meet regulatory expectations with respect to initial and on-going reporting, the ASF has released to members for final comment the amalgam of their comments into a single version. This addresses most of the concerns and preferences raised by investors and issuers alike. The ASF proposes to recommend to ASIC that implementation be staggered, such that only a certain percentage of the 200+ fields be met initially with all fields to be reported by the end of 2010.
ASF responds to request from ASIC to submit its views to IOSCO on post-trade transparency for structured credit transactions
23 December 2009
Upon request, the ASF agreed to undertake consultation with the local market, particularly structured credit investors, to assess the costs and benefits of introducing a post-trade [price] transparency regime in Australia.
The submission reflects the relatively diverse views among similar market participants but seeks to explain each perspective. In particular, the illiquidity of the structured credit market is central to a debate about what would promote and what would undermine promoting liquidity going forward, and price transparency’s role in that.
ASF delighted with securitisation exemption in new credit law and in regulations released
23 December 2009
The ASF through a working group of its law firm members made arduous, technical and persistent representations to The Treasury and others in a bid to ensure that each part of the securitisation value chain that should sensibly be excluded from the new credit regime were indeed exempted.
Chris Dalton, ASF CEO, expressed his thanks to the ASF working group, and remarked, “This is an excellent example of the ASF’s work: technically diligent, discrete, and effective.”
Regulation 203 is a guide for those who may engage in credit activities as defined in the National Consumer Credit Protection Act 2009. Assignees of a lender, lessor, mortgagee or beneficiary of a guarantee is the most relevant section pertaining to securitisations (see RG 203.34–RG 203.35).
APRA consults on enhancements to Basel II Framework
21 December 2009
The Australian Prudential Regulation Authority has released for consultation a discussion paper, accompanied by proposed amendments to relevant prudential standards and prudential practice guides (PPGs), on proposals to enhance the Basel II Framework in Australia. As far as securitisation is concerned, the following specific measures are proposed:
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higher risk-weights for resecuritisation exposures and increased credit conversion factors for short-term liquidity facilities provided to off-balance sheet conduits;
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guidance in relation to valuation practices and capture of off-balance sheet and securitisation activities; and,
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increased disclosure requirements for securitisations.
AOFM Purchase of RMBS - Extended Program
The ASF is pleased to report that the AOFM has decided to adjust its approach to investment in RMBS to take account of changing market conditions and feedback from consultations with industry even if not all of its recommendations were accepted, such as permitting new issuers to come to market. We are particularly pleased that the following representations made by the ASF on behalf of the industry were accepted:
1. AOFM will adopt a reverse enquiry approach for considering investment proposals. This will provide more flexibility to arrangers and issuers in the development of proposals and the timing of issues, assessed against the two objectives of supporting competition in lending for housing and supporting lending to small business.
2. A 'pipeline funding' approach will be available to lenders who have been reliant on securitisation markets to fund mortgage lending, providing them with greater funding certainty and so a greater capacity to compete.
ASF is disappointed that the liquidity scheme has not been adopted, as originally contemplated in The Treasury's consultation, as it believes this would have provided an excellent backstop for investors to participate whilst providing price certainty albeit with a disincentive to use such a facility. Nonetheless, ASF will continue its dialogue with The Treasury and AOFM in a bid to ensure that the scheme offers the best possible outcome for the market and the economy.
TREASURER DIRECTS THE AOFM TO INVEST IN UP TO A FURTHER $8 BILLION IN RMBS
To view The Treasurer's press release, please click here.
Australian Securitisation Response to IOSCO TC#2 Consultation ReportTechnical Committee #2 of IOSCO’s Taskforce into Unregulated Markets & Products sought submissions from around the world on introducing greater transparency of pricing for structured products, including securitisation. The arguments, the ASF has found through its industry consultation, are finely balanced. Please see our submission for further information.
ASF makes submission to the Inquiry into the Personal Property Securities (Consequential Amendments) Bill 2009 Click here to read the ASF’s position.
Fitch: Australian Structured Finance Performance Remains Robust in Q3/09 Fitch Ratings has today said that a total of 200 publicly-rated tranches backed by assets in Australia or New Zealand were affirmed during the third quarter of 2009, one was upgraded and 59 were downgraded. "Consistent with previous quarters, most Australian RMBS downgrades are not attributable to the deteriorating performance of the transactions, but rather to a change in Fitch's assessment of lenders' mortgage insurance providers," said Leanne Vallelonga, Associate Director in the agency's Asia Pacific Structured Finance team. "The Reserve Bank of Australia's increase in the official cash rate by 0.25% effective 7 October 2009 has signalled a change in monetary policy from historic lows. However, Australian interest rates remain at historically low levels and are not expected to significantly increase stress for borrowers at this point," added Ms. Vallelonga.
ASF welcomes ASIC Commissioner, Greg Medcraft, to its September Evening Series on ‘skin-in-the-game’
The Australian Securitisation Forum was delighted to be able to include Greg Medcraft on its panel of experts discussing the expectations of IOSCO and ASIC with respect to securitisation issuers retaining a long-term economic interest in their issuance. Commissioner Medcraft’s presentation can be viewed here.
ASF and ASIC working hard to deliver the best outcome for Australian securitisation markets
The Forum has been regularly meeting with ASIC and The Treasury in order to ensure that the right outcomes are achieved for Australia as a result of the G20/IOSCO proposals for securitisation markets.
Pre- and post-issuance disclosure together with IOSCO's recommendation for issuers to retain a long-term economic interest in their issues are endorsed by the ASF. The precise design is a matter of industry consultation being led by ASF.
In particular, because debate has raged globally over how much retention is necessary and what form it should take, the ASF is keen to ensure that mutual cross-border recognition is established so as to ensure Australian issuers - with their excellent track record - are not penalised when issuing into European and North American markets. Already, the US Congress and the European Parliament have forged ahead with differing visions for how the IOSCO principles should be accomplished. In other words, an equivalent regime is our preferred outcome; not an identical one.
ASF launches RMBS pre- and post-issuance disclosure package
The G20 and IOSCO and finally in turn ASIC as our local securities regulator released their final expectations with respect to pre- and post-issuance disclosure and on-going reporting of securitisation transactions.
The ASF has launched its Request for Comment to Members. ASF has begun conducting multi- and bi-lateral discussions with Members surrounding the draft disclosure package. Deadline for comments is 6th November 2009.
National Consumer Credit Protection Regulations 2009: ASF Submission
Today, the ASF made its final submission in relation to the National Consumer Credit Protection Bill’s Regulations. Specifically, it highlights the uncertainty about the application of the Bill to SPVs, which as presently constructed will have serious adverse consequences not only for the securitisation industry, but also for the operation of Australian financial markets. This is because certainty is an essential element of all commercial transactions as it allows the parties to adequately allocate and price risk in these transactions.
Australian Securitisation Forum welcomes IOSCO publishing its final report from its Task Force on Unregulated Markets & Products (‘TFUMP’)
ASF supports the key findings and is already engaged with ASIC in the implementation of any recommendations in the Australian market. In summary, the report recommends greater regulation to improve transparency and responds to G20 calls for greater oversight of previously unregulated markets, including securitisation markets. Specific recommendations as detailed in the IOSCO press release are:
Requiring originators and/or sponsors to retain a long-term economic exposure to the securitisation to ensure aligned interests
Improve disclosure by issuers to investors including initial and ongoing information about underlying asset pool performance
Review investor suitability requirements as well as the definition of sophisticated investor in the relevant market and strengthen these requirements
A copy of the IOSCO press release and final report can be found at http://www.iosco.org/news/pdf/IOSCONEWS165.pdf.
Once the ASF National Committee has signed off on the draft disclosure package and skin-in-the-game requirements, a Request for Comment (RfC) will be issued to ASF Members, culminating in a plenary session to be held next month. An invitation to this event will be issued this week.
Any member with queries or comments on the disclosure package or the skin-in-the-game requirements is welcome to put these in writing for consideration by the ASF Market Standards & Practices sub-committee.
The Australian Securitisation Forum (ASF) has developed the first specialist qualification for professionals working in the field of securitisation, the Securitisation Professionals Program. Participants successfully completing the Program, and its assessment, will be eligible for a Diploma of Financial Services FNS50107, a level 5 qualification under the Australian Qualifications Framework. There are nine specialist competencies that will be achieved. Further information.
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