The AOFM today announced it wishes to provide an update to its
9 September 2022 publication, which advised of its intent to use the ABSF to support the development of the market for public term securitisation transactions backed by SME lending by reducing execution risk.
In the announcement, the AOFM notes its has modified its position on pool composition. Specifically, recognising that ABS backed by SME loans typically have a non-trivial minority of underdeveloped collateral types, the AOFM will no longer require collateral pools supporting public transactions to comprise a majority of loans secured by underdeveloped collateral types in order to qualify for ABSF investment.
Additionally, the AOFM will no longer apply a minimum threshold on the proportion of underdeveloped collateral types in a pool in determining a transaction’s eligibility for ABSF investment. It will, however, seek to apply stretch goals with regards to the proportion of underdeveloped collateral types, on a case-by-case basis. In doing so, the AOFM expects that the proportion of these loans commonly seen in public term transactions will increase over time.
All other aspects of the update provided on 9 September 2022, including but not limited to the commitments required of proponents, AOFM’s approach to pricing, the book build process and disclosure are unchanged.
Read the full announcement from the AOFM >