The Australian and New Zealand securitisation and covered bond markets saw strong primary issuance in early 2020 until the onset of the pandemic whichsaw a significant reduction in new issuance volume.
The Australian market has demonstrated its resilience during the crisis and it is notable that confidence has re-emerged with deal flow bouncing back strongly in the September quarter which saw A$11.3b printed – the most for this period since 2017. Volume was bolstered by bank supply which, having been largely absent this year, accounted for almost half the total issuance (Source: KangaNews).
As at 18 December, publicly issued RMBS in 2020 was down 26% to $26bn (the number of deals is down by 7 to 31) and public ABS issuance was down 27% to $5.1bn (13 deals in both 2020 and 2019) (Source: National Australia Bank - Securitisation Insights Issue 38)
On March 19, the government’s economic response package was announced - comprising the A$90 billion Reserve Bank of Australia (RBA) term funding facility (TFF), the A$40 billion SME guarantee scheme and A$15 billion Structured Finance Support Fund (SFSF).
Administered by the Australian Office of Finance Management (AOFM), the SFSF was put in place to support continued access to funding markets for SMEs impacted by the economic effects of the coronavirus and to mitigate impacts on competition in consumer and business lending markets. It provides access to funding for lenders unable to access the RBA’s TFF through investment in public (primary and secondary) markets, private (warehouse) markets and forbearance.
During the height of the crisis, the ASF worked closely with its members and the AOFM on the establishment of arrangements to assist small lenders to provide forbearance for borrowers experiencing Covid-19 related hardship. This resulted in the development of a forbearance special purpose vehicle (fSPV) administered by the AOFM through the SFSF. It enables originators of securitisation trusts to generate additional liquidity by selling reimbursement receivables into the fSPV, thereby providing temporary liquidity support for Covid-19 hardship related missed interest payments on assets in securitisation trusts, reimbursing the support from future trust residual income. The first draw on the fSPV occurred in September.
As at 30 September, total funds invested or committed by the SFSF were $3.6 billion.
Regulation continues to impact on our industry and the ASF was responsible for making a number of submissions and being involved in activities during the course of the year including the following:
Regulatory engagement has been an important role for the ASF and in addition to formal submissions, the executive and committee members have met with representatives of ACCC, AOFM, APRA, ASIC, Treasury, RBA and RBNZ on several occasions to further the interests of members.
With the onset of the pandemic, ASF activities moved to a virtual platform with the ASF hosting a range of events including:
The ASF Chair and Executive Office would like to extend thanks to all our members for their contributions to the ASF this year, whether through financial, intellectual, or resourcing contributions.
We look forward to 2021 and hope that the securitisation industry will be able to engage in person once again.