Incorporating Australian Securitisation & Covered Bonds >> Issue 12 • 2017
With regulatory certainty and some of the most encouraging demand in years, Australia’s securitisation industry is entering a new phase
ASJ AUSTRALIAN SECURITISATION JOURNAL
Incorporating Australian Securitisation & Covered Bonds
>> Issue 12 • 2017
ASF MANAGEMENT COMMITTEE Chairman Chris Green Deputy Chairmen Sarah Hofman Mary Ploughman Treasurer Graham Mott Chief Executive Officer Chris Dalton asf@securitisation.com.au +61 2 8243 3900 www.securitisation.com.au ASJ PUBLISHED BY
www.kanganews.com +61 2 8256 5555 Chief Executive Samantha Swiss sswiss@kanganews.com Managing Editor Laurence Davison ldavison@kanganews.com Deputy Editor Helen Craig hcraig@kanganews.com Editorial Assistant Eloise Hillier-Richardson eloisehr@kanganews.com Business Development Manager Jeremy Masters jmasters@kanganews.com Sales Support Officer Jessica Callander jcallander@kanganews.com Design Consultants Hobra Design www.hobradesign.com Printed in Australia by Spotpress
© ASF 2017. REPRODUCTION OF THE
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CONTENTS
2 ASF WELCOME 4 ASF STRUCTURE 12 FEATURE 18 ROUNDTABLE 29 COPUBLISHED Q&A 32 COPUBLISHED Q&A 34 ISSUER PROFILES
Chris Dalton, chief executive, Australian Securitisation Forum The ASF is responding to the new priorities of the structured-finance industry with a new subcommittee setup targeting market growth.
The Australian securitisation market finally has secure foundations for the future. Deal flow at the start of 2017 highlights a number of positive factors, including issuance diversity and robust global demand. NAB hosted key players in Australia’s consumer-finance sector, to discuss growth opportunities and the role of securitisation.
34 AMP Bank ANZ Banking Group Australian Finance Group 35 Auswide Bank Bank of Queensland Bluestone Group 36 Columbus Capital Commonwealth Bank of Australia Credit Union Australia 37 Firstmac Flexi Cards FlexiGroup 38 Heritage Bank IMB Bank ING Bank (Australia)
Pepper UK is rolling out a global business model with local tweaks, and is close to a securitisation debut. Resimac talks about its footprint and growth plans in the wake of a business-changing merger.
39 Latitude Financial Services La Trobe Financial Liberty Financial 40 Macquarie Group ME 41 Motor Trade Finance MyState Bank National Australia Bank 42 People’s Choice Credit Union Pepper Group P&N Bank 43 RedZed Lending Solutions Resimac Suncorp Group 44 Westpac Banking Corporation
ASF WELCOME FOREWORD
FROM THE CHIEF EXECUTIVE
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elcome to the mid-year edition of ASJ. It is pleasing to note that greater confidence has re-emerged in the Australian securitisation market in 2017 following an erratic pattern of new primary issuance throughout 2016. For the first quarter of 2017, issuance of residential mortgage-backed securities (RMBS) totalled A$5.4 billion (US$4 billion), easily eclipsing the A$3.5 billion in the first quarter of 2016. Additionally, more than A$3.5 billion of asset-backed securities (ABS) was issued in the first quarter which compares with A$930 million for the three months to March 2016. While Australia’s major banks did not issue any RMBS in the first quarter, new supply came from regional banks, the mutual-bank sector and nonbank financial institutions. A feature of the issues was oversubscription of bids and upsizing of deal sizes to accommodate investor demand. While most issues were denominated in Australian dollars many issuers reported participation by global investors – a healthy and encouraging sign for the market. The ABS sector saw several notable transactions come to market in the first part of 2017. Westpac Banking Corporation’s Crusade ABS set a record in February for being the largest-ever auto-receivable ABS to hit the Australian market. The issue was upsized to A$2.15 billion. Latitude Australia Credit Card Master Trust was another exciting development with a new collateral type, credit-card receivables, being offered for the first time in Australia. The issue was made through a master-trust vehicle, a departure from the passthrough structures typically used to date for both RMBS and ABS in Australia. The release by the Australian Prudential Regulation Authority of the new securitisation prudential standard, APS 120, in November 2016 and associated guide, APG 120, in April 2017 has set the future framework for securitisation activity by Australian regulated banks. From January 2018, APS 120 will regulate the multiple roles played by Australia’s financial institutions as issuers, investors or transaction counterparties in the securitisation market. A core part of the Australian Securitisation Forum (ASF)’s strategy is to provide high-quality professionaldevelopment opportunities for the industry. Following the finalisation of APS 120 in 2016, the ASF is now offering a one-day workshop to inform market participants on the practical implications of the new regulatory standard for regulated banks and others. As part of the commitment to quality, the ASF has reviewed and refreshed the content of its professional-development programme. In 2017, the ASF will offer its securitisation fundamentals, securitisation professionals, applied securitisation and securitisation trust management courses in Australia. A tailored securitisation fundamentals course for the New Zealand market was successfully launched in Auckland in May. Great progress is being made with the ASF’s future leaders and young professionals initiative, kicking off with the forming of a subcommittee led by Joshua Knuckey of AMP Group. The aim of the subcommittee is to promote securitisation as an attractive and long-term career opportunity for new and younger employees of ASF members. Finally, membership of the governing body of the ASF, the national committee, has been refreshed following elections and appointments at the annual general meeting held in November 2016. We welcome Scott Barker of IFM Investors, June McFadyen of FlexiGroup, Will Farrant of Credit Suisse and James Shaw of Bank of Queensland as new members. We also congratulate Sarah Hofman on her election for a second term. In 2017, the ASF remains focused on its core and longstanding objectives. These are to provide the Australian market with a platform to discuss market and regulatory matters, advocate on behalf of members, provide a comprehensive suite of professional-development programmes, improve market standards and practices, and promote the market to global investors and policymakers. I look forward to an active 2017 for the Australian, New Zealand and global securitisation markets.
CHRIS DALTON
CHIEF EXECUTIVE, AUSTRALIAN SECURITISATION FORUM 2 · Australian Securitisation Journal | Issue 12_2017
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AUSTRALIAN SECURITISATION 2017 The annual conference of the Australian Securitisation Forum 20-21 November, the Hilton, Sydney
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NEW MARKET, NEW SHAPE FOR ASF SUBCOMMITTEE STRUCTURE The Australian structured-finance market is entering the next phase of its evolution, as it emerges from an extended post-crisis regulatory process and seeks to consolidate and grow its engagement with investors at home and abroad. The Australian Securitisation Forum (ASF) has responded to the cycle change by restructuring its subcommittee framework to align it better with future industry goals.
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ver the following pages, you can read insights from the chairs of two new subcommittees that will be at the forefront of the ASF’s market-development drive, including targets, approaches and personal input. These are the investor subcommittee and the industry and markets subcommittee. You can also read an update from the women in securitisation subcommittee, focusing on how it plans to respond to feedback from women across the industry.
INVESTOR SUBCOMMITTEE The ASF established the new investor subcommittee to provide a forum for the buy side to discuss views on topical industry matters, and provide input and recommendations to the ASF on changes that would improve the operation and attractiveness of the Australian securitisation market to domestic and international investors. A key goal is to enhance the liquidity and activity of the Australian securitisation market and to attract and maintain the confidence of a growing body of investors. The subcommittee’s primary aim is to increase the confidence of investors to participate in the both the primary and secondary securitisation markets. It will do so via a number of avenues, including: ♦ Championing an increase in the allocation of assets to investment in residential mortgage- and other asset-backed securities as part of a greater allocation to fixed income 4 · Australian Securitisation Journal | Issue 12_2017
in Australia’s superannuation and funds-management markets. ♦ Actively pursuing the adoption of best practices within the industry. ♦ As necessary, considering relevant regulatory and policy developments to provide the ASF with an investor perspective in forming its positions or responses. ♦ Aiming to meet with key Australian regulators on an annual basis.
INDUSTRY AND MARKETS SUBCOMMITTEE The industry and markets subcommittee will monitor and discuss local and global developments in securitisation and debt capital markets more generally, to promote a more efficient and larger securitisation market in Australia. A key outcome is to position the Australian market at a best-of-class level to promote a growing, active and liquid securitisation sector. The subcommittee’s responsibilities are: ♦ To review and discuss developments in and the direction of the Australian securitisation market. ♦ To inform itself about and consider new best practices that may be operating in other sectors of Australia’s financial markets or global securitisation markets to improve the efficiency and liquidity of the Australian securitisation market. ♦ Actively to champion the adoption of best practices within the industry. ♦ To provide clear and concise best-practice guidelines for the industry to adopt, which would include publication on the ASF website. ♦ To interact with other industry sectors through their respective industry bodies on overlapping market issues. The ASF has a clear desire that these two subcommittees will assist in creating a clear path of access between the issuer and investor communities, allowing each to understand the other’s perspective while being the advocates of their own community via a common forum, the ASF. The two subcommittees will each aim to meet on a bimonthly basis going forward, and each has so far met in February and April. ■
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www.securitisation.com.au/courses Course dates for H2 2017: ♦ New Zealand securitisation fundamentals: 1 August, Auckland ♦ APS 120 workshop: 17 August, Sydney ♦ Securitisation professionals: 13-14 September, Sydney ♦ Securitisation fundamentals: 12 October, Sydney ♦ Securitisation applied: 1-2 November, Sydney If you have any queries about courses, including regarding customised or in-house courses, please contact: Lynsey Jackson T: +61 2 8243 3907 E: ljackson@securitisation.com.au
Q+A
DAVID ZIEGLER CHAIR INDUSTRY AND MARKETS SUBCOMMITTEE
SUBCOMMITTEE FOCUS: INDUSTRY AND MARKETS The new Australian Securitisation Forum (ASF) industry and markets subcommittee will be a leading element of the association’s drive to establish best practice in the new regulatory environment. David Ziegler, the subcommittee’s chair and also division director, group treasury at Macquarie Bank in Sydney, says investor engagement is another key goal for industry and markets.
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hat is the purpose of the new industry and markets subcommittee, and how does it fit in with the new investor subcommittee and the existing regulatory one? ◆ Since 2008, the ASF has been quite focused on government actions and the local and international regulatory changes that emanated from the financial crisis. Hence the existence of subcommittees such as government and industry, market standards and practices, and regulation and prudential. These regulatory impacts fell quite heavily on the issuer community – investors were part of the process but there’s no doubt the bulk of resources the ASF drew on were from issuers, advisers and intermediaries. It now feels that the revised regulatory framework has largely been established, and the process of markets adjusting to the new regulatory environment is ongoing. The industry and markets subcommittee aims to assist this period of market adjustment and, over the longer term, enable the Australian securitisation market to flourish. What we are – hopefully – seeing now is an opportunity for the ASF to return to its pre-2008 roots and become a little more markets focused.
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How has this awareness filtered through into the new subcommittee structure? ◆ First and foremost, the national committee decided to set up the new investor subcommittee (see p8), which we hope will provide a conduit for improved investor engagement with the ASF. The role of government liaison has reduced somewhat, so this part of the responsibilities of the old government and industry subcommittee has moved to the ASF chief executive’s office directly. Some aspects of the old market standards and practices subcommittee now sit within the investor subcommittee. Industry and markets – the subcommittee I chair – is effectively the combination of the ‘industry’ side of the old government and industry subcommittee with the remaining aspects of the old market standards and practices subcommittee. What sort of development led the ASF to become aware that there was an opportunity to upgrade investor engagement? ◆ A specific example is around the residential mortgage-backed securities loan-level data reporting required by the Reserve Bank of Australia (RBA). While the ASF and issuers agree with the broader market objectives underlying
the enhanced disclosure regime, it has been quite challenging for issuers to implement. This is not only because of the technical system aspects, but also the need to reconcile obligations under Australian privacy laws with the enhanced disclosure regime. While the ASF consulted with industry, including investors, over an extended period to develop issuer guidelines for loan-level data disclosure, at the end of the day the current regime is not fully meeting investor expectations. I attribute this in part to the ASF not having been readily able to obtain broad investor consensus opinion on these matters and communicate the challenges and limitations faced by issuers. On the other hand, it was not always clear to individual investor members how best to engage with the ASF. What will be the main focus areas of industry and markets? ◆ I see two main roles. One is more short term, being establishing market standards. Local and offshore markets continue to evolve as new regulations become effective. There is a role for the subcommittee to bring the ASF closer to the way primary markets operate. An example is aspects of the process of bringing primary deals to market – including announcement and issuance timetables and disclosures. RBA loanlevel data, other investor reporting and consistency of arrears reporting would also fall into this category. The second aspect, which is for the longer term, is about developing the securitisation market as a whole. This means things like the functioning of secondary markets, and investors’ allocation to fixed income generally and securitisation product within it. The ASF has discussed advocacy in this area for some time, for example through increased engagement with the superannuation sector and asset consultants. On this investor-engagement piece, how do you see the industry and
markets subcommittee interacting with the investor subcommittee? ◆ The national committee has given some thought to this, because the ASF represents a broad range of constituents across the securitisation industry. At the heart of the market are investors and issuers. At present, the national committee sees a clear need for an investor subcommittee as an ‘investors only’ group, which can be organised best to suit the current needs and time constraints of investors. However, the national committee is also keen that this not propagate an ‘us and them’ environment between issuers and investors within the ASF. So a high level of coordination between the new investor subcommittee and other ASF subcommittees, including industry and markets, is necessary. Communication between the industry and markets and the investor subcommittees will go both ways. We envisage that the chair of the investor subcommittee, Scott Barker, will raise important investor issues with industry and markets either to myself directly or via the ASF national committee. Communication will also go the other way. The investor subcommittee will act as a focal point for other subcommittees to ensure investor perspectives are sought on matters being discussed within the ASF. For example, if the ASF is drafting a submission to a regulatory consultation or a market standard, a draft may be tabled with the investor subcommittee for input. What are the industry and markets subcommittee’s priorities on the market practices side? ◆ You might have guessed by now that RBA loan-level reporting is a priority – one that has been on the ASF agenda for some time! Pretty clearly it’s not working as well as market participants would like, even after a couple of years. Looking at, and aligning ourselves with, global market practices is also a focus. This means listening to what global investors are telling us about the Australian sector, the quality of our
reporting, our disclosures and other things of this nature. Offshore investors ultimately benchmark Australian securitised product against what’s happening in their own jurisdictions, and we want the Australian market to be perceived as comparable and transparent in this context. As a relatively small market, ultimately the onus is on us to make it easy for offshore investors to engage with Australian securitised product. These two main focus areas overlap to some degree. For example, to date Australia hasn’t gone down the route of a central data warehouse as has been the case in Europe, and we have specific privacy issues in Australia that make it more challenging for issuers to replicate what offshore investors have become
Fundamentally this is what makes it a market. These differences do however make it challenging to define a one-sizefits-all solution to disclosure. I think it’s fair to say that when the ASF has attempted to develop solutions these have largely been based on anecdotal feedback gathered from one-on-one meetings between issuers and investors. If the transparency and disclosure needs of the market are not being met, it is my hope that the investor subcommittee will improve investor engagement to clarify and prioritise investor feedback – so issuers better understand what information is vital and what are the ‘nice to haves’. The ASF will then be in an enhanced position to define market standards and best
“As a relatively small market, ultimately the onus is on us to make it easy for offshore investors to engage with Australian securitised product.”
used to. We need to communicate to offshore investors that the current limitations in Australia are not due to lack of willingness on issuers’ behalf – they’re just the consequence of different legal issues and a regulatory approach that is particular to this market. Are there any areas of transparency in which you feel the Australian market could do better? ◆ On the whole, I consider that Australia has good transparency practices and issuers have been responsive to investor needs. Having said this, there are differences in how individual issuers deal with the information investors want and need, and the costs associated with disclosure. This is the inevitable consequence of the differing negotiating positions of these stakeholders and their respective risk-management and compliance policies.
practices that most closely meet the needs of investors and issuers. Speaking personally, why did you feel it was important to devote your time and energy to this subcommittee in particular, given all the other responsibilities of your day-to-day role? ◆ I have a lot of exposure to the market from my day job as an issuer, and I’m keen for this subcommittee to exploit the opportunity that exists for the ASF to get closer to the market. The timing is right because the revised regulatory framework is now largely in place, so the focus should turn to how the market is responding to these regulatory changes and what will shape developments in future. I want the ASF to be at the forefront of understanding market drivers and helping the industry move forward. ■ 7
Q+A
SCOTT BARKER CHAIR INVESTOR SUBCOMMITTEE
SUBCOMMITTEE FOCUS: INVESTORS The main objective of the new Australian Securitisation Forum (ASF) investor subcommittee is to foster a more holistic engagement with the buy-side participants in the securitisation market. The initiative underscores a strategic commitment to the buy side for the peak industry body, reveals Scott Barker, the subcommittee’s Melbourne-based chair and regional head of Asia Pacific at IFM Investors (IFM).
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f the investor subcommittee could achieve one thing while you’re chairing it, what would it be? ◆ The aim of the subcommittee is to foster a more holistic engagement with participants in the Australian securitisation market. For many years, the ASF, as the peak industry
This is the first time the ASF has had an investor subcommittee. Were you involved from the start, and can you tell us a bit more about the subcommittee’s makeup and practices – how many members, who they are and how often you meet? ◆ This is my first formal appointment to the ASF. I am on the national
“Having greater diversity in the asset class may pique the interest of new investors to get involved or take other parts of the capital structure and securitisation product more generally.”
body, has been very active in facilitating and encouraging engagement between market participants. However, these efforts have traditionally been more heavily focused on the issuers, regulators and banking community – leaving a missing link in engagement with investors. So what we are looking to achieve is a greater voice for the investor community at the highest level and in a coordinated manner. 8 · Australian Securitisation Journal | Issue 12_2017
committee and I am also the chair of the investor subcommittee. I have been involved with the ASF in establishing the subcommittee from the outset. The subcommittee has only just met for the second time and so is still embryonic at this stage. It is made up of a range of participants from the real-money sector, from small to large players. The members are all Australian-focused and domiciled but
are geographically spread around the country. The full list is close to final and we expect the subcommittee ultimately to comprise around 10 members. We are drawing our members from a range of institutional fund-management businesses that are engaged with the securitisation sector, with diversity in geography, business scale and appetite across the capital structure. What are the initial goals you have on the agenda to achieve, and what is the order in which you’d like to accomplish them? ◆ We are looking at several objectives over the course of the coming year. The first is better transparency of information in the marketplace. Part of this is building on the good work that has already been done by the Reserve Bank of Australia (RBA) and the ASF when it comes to loan-level disclosure. We view this as a good initiative for residential mortgage-backed securities (RMBS) and it has its merits for the broader investor community. But we have to acknowledge that there are also challenges. For instance, take-up across the industry is not uniform. We would like the investment community to reengage on a number of common points of interest that can be communicated to issuers through the ASF. In its current form, we believe the data may not always capture all the information needed by the widest universe of investors. We will also seek to broaden the communication the ASF has with a deeper universe of potential market participants, including gatekeepers like asset consultants, so we can educate current and potentially new market participants. One of the foundations of the ASF is education and the association runs a strong, formal professionaldevelopment programme. I want to see the ASF engage with interested parties and provide information to facilitate improved market functionality. The RBA loan-level data situation is obviously an industry focus – for
instance, it also came up several times in conversation with the chair of the new industry and markets subcommittee, David Ziegler (see p6). The next phase of industry response to the loan-level data issue is clearly a work in progress, including on the investor side – but what is the state of play? ◆ The RBA has stipulated that, to be repo-eligible, RMBS and assetbacked securities have to contain a range of information displayed in a specific format. There has been some engagement through the ASF around the information requested, recognising the considerable influence the RBA has on how this information is structured. We have received some feedback to date. The ASF is very supportive of the RBA’s requirements, but is also cognisant of the fact that as the rubber hits the road some of the practical implementations for the data are not straightforward for all investors. I imagine the data populates easily into the RBA’s models but each investor uses different systems, models and processes. To translate this RBA-style format to match each investor’s bespoke requirements has its own challenges.
subcommittee as well as everything else? ◆ You’re right: we are all busy. But IFM is a significant participant in the Australian securitisation market and it is therefore in our interest to ensure we have a mature, functioning and cohesive marketplace. Taking on the role of chairing the investor subcommittee is my way of reinvesting and contributing to the greater functioning and purpose of the market. Historically, the ASF was perceived as an issuer-sponsored forum so a lot of the focus was predominantly on issuers and the banking community. The establishment of the investor subcommittee is another step in the evolution of the ASF, as it seeks to engage more actively with the various stakeholders it needs to represent. IFM is very happy to encourage and support this initiative and I was happy to take on chairing the subcommittee as my personal contribution. An important point to note is that, as members of the ASF national committee and the subcommittees, members aren’t torchbearers or representatives of our employers. While my perspective will be coloured by my current and historical
in Australia for some time but elsewhere the sector has struggled to attract consistent demand from the plurality of local real-money accounts. Why do you think the asset class has worked for your firm when it doesn’t always for others? ◆ Investing in securitisation products requires a significant level of analysis and understanding, and to do this work requires a time commitment not all investors are prepared to make. At IFM, we have a significant team, skill set and history within the securitisation space. Within the IFM team, we have people that have banking, credit-rating and issuer experience all related to securitisation. This broad and deep team gives us the capacity to spend time working on securitisation analysis that perhaps isn’t shared by other fund managers. In recent times, investors have been very cognisant of the risks and returns on their investments and, to the extent securitisation allows for potentially very highly rated but low-risk securities still with attractive returns, this has probably piqued the interest of a traditionally sidelined investor subset. Investors are looking for value based on
“We are drawing our members from a range of institutional fund-management businesses that are engaged with the securitisation sector, with diversity in geography, business scale and appetite across the capital structure.”
We need to work through these nuances – though I’d note that some of them may be relatively minor – to achieve the best efficiencies for issuers, investors and the market as a whole. Speaking personally, you have a lot on your plate as it is including a recently expanded role at IFM. Why did you feel it was sufficiently important to take on chairing this
activities, my role with the ASF is as an individual drawing on my knowledge and experience. Like the other national committee and subcommittee members, we contribute to the ASF in a personal capacity.
a risk component, and securitisation as a general activity potentially allows investors to have a greater degree of flexibility in choosing their risk and return parameters – because of its structure and tranching.
Speaking about your day job for a moment, though, IFM has been quite closely associated with the structured-finance market
What is the value for you as an investor in promoting an asset class to your peers? Won’t you end up losing value if the overall bid grows? 9
◆ We are conscious that there is a
◆ Each new issuer, asset class and
◆ That’s right. And it’s also about being
potential trade-off but ultimately having a smaller component of a bigger pie still offers opportunities for a range of investors. In reality, one of the structuring features of securitisation is that you don’t need to have a very diverse investor base to allow securitisation structures to work effectively. If there were only triple-A or double-B investors in an assetbacked securities (ABS) or RMBS deal, for instance, the rest of the transaction structure wouldn’t work. So from one extreme, as self-interested investors, we would not be seeking to have every single investor in the world chasing Australian securitisation product. Having said this, the more investors there are in ABS and RMBS the more liquid and tradeable the product becomes, meaning it can play a different role in the portfolio compared with the function it currently performs. It would be positive if securitisation could reach the stage of being able to provide more liquidity. On balance, the goal is to enhance the efficiency and
structure has the potential to satisfy a different component or subsection of the central investor universe. As investors, we all have to weigh up the trade-off between liquidity and diversity. The more homogenous an asset class or security type the greater liquidity and fungibility there will theoretically be. The other component of liquidity is diversity of market participants. In other words, having greater diversity in the asset class may of itself pique the interest of new investors to get involved or take other parts of the capital structure and securitisation product more generally. Ultimately, there is benefit for both issuers and investors, and the securitisation market more broadly, from having variety of securitised product. Having said this, liquidity is not the be all and end all. One thing I’m conscious of is not turning the market into a massively standardised or homogenised Australian securitisation product. If it becomes very ‘cookie
able to have an appropriate discussion that recognises the real issues for investors in the marketplace, in the hope that these discussions make their way through to the market’s gatekeepers – for example the ones that deal with operational issues like noteholder communication. The impediments to timely and efficient noteholder communication are significant. If an issuer wants to communicate with its noteholders, the structures that are currently in place make this process quite challenging. Many of the pipes that send information to the investment community are slow and in some cases the information just falls into black holes. This means very often investors and issuers are reliant on informal communication based on ‘who knows who’, with both ends of the pipe needing to let those in the middle know information is coming so communication and voting can be formalised in a timely manner. These
“The more investors there are in ABS and RMBS the more liquid and tradeable the product becomes, meaning it can play a different role in the portfolio compared with the function it currently performs. It would be positive if securitisation could reach the stage of being able to provide more liquidity.”
transparency of the marketplace, which will ultimately be better for all market participants including investors, issuers, banks and brokers. But this is not going to happen overnight. The start of the new year has been encouraging in Australian structured-finance issuance markets, in diversity of deal origin even more so than outright volume. Do you think the level and variety of securitised supply in 2017 to date is sufficient to help further deepen and diversify the investor base? 10 · Australian Securitisation Journal | Issue 12_2017
cutter’, you run the risk that people’s care factor along the spectrum of a product’s life – from origination to distribution and investment – falls. Some investors may assume that because it is all triple-A rated they don’t need to give it full and due credit consideration. We are all happy to have more investor participants, provided these investors are rational and reasonable around their motivations to invest. So it’s not just about getting people involved but specifically getting the right people involved?
kinds of antiquated workings are what we’re trying to address. Does offshore investor relations fall under your remit or it more of an issuer-side consideration? ◆ At this stage, the investor subcommittee is focused on a peer group of Australian investors. The time may come when we are able to expand to include a broader universe. But in the first instance we want the subcommittee to be manageable, so establishing it with local members is the first step in the subcommittee’s evolution. ■
WHAT WOMEN WANT In 2016, the Australian Securitisation Forum’s Women in Securitisation (WIS) subcommittee conducted a survey of its constituency to get to the heart of what women in the structured-finance industry really want. The survey garnered feedback on a range of topics including gender diversity, the success of networking events and general awareness of industry initiatives.
T
he results of the survey will enable WIS to shape its future engagement with women and to deliver topics and events that are relevant and beneficial to the securitisation community. WIS subcommittee member and Sydney-based chief executive officer at Eticore, Belinda Smith, comments: “The survey and other tools and initiatives the subcommittee is using will greatly benefit our industry. The aim is to assist the securitisation industry to continue to thrive, and to grow in maturity to a point where diversity and gender-gap concerns are a thing of the past. We want transparency, flexibility and diversity to define our future.” In the wake of the first iteration of the survey, key members of the WIS subcommittee – Jennifer Chamberlain, Debbie Long, Monica Stephens-Saliba and Katrina Huang – analysed the survey responses and are proud to share a flavour of the findings with ASJ. The survey highlights that gender diversity continues to be an issue within the securitisation industry and the workplace more broadly. Only 39 per cent of respondents believe gender diversity is fully embraced and successfully implemented at their place of work. Nearly two-thirds of respondents say this gives them cause for concern about this issue within the securitisation industry. Respondents acknowledged that their organisations are adopting initiatives to promote diversity, but insist further change is needed in the industry to challenge traditional mindsets. Survey responses also demonstrate the extent to which networking with other women is valued. The ability to reconnect with past colleagues and to meet people new to the industry is something with which respondents believe
WIS can greatly assist. This is consistent with high attendance levels at recent WIS-hosted lunch events and positive event feedback. Responses also demonstrate robust demand for more WIS events, including smaller group gatherings to enable networking with men and women in senior professional positions. In particular, stand-up events were mentioned as being effective for networking. The quality of guest speakers is viewed as important to the success of an event. Respondents praise past WIS-event speakers as being “highly motivational” and “providing valuable tips as well as being entertaining”. WIS is committed to holding more events in Sydney, Melbourne and Brisbane and potentially in other regions in the future. In addition to the opportunity to network, respondents are seeking more personal mentoring opportunities and career guidance from leaders within the industry. While the range of mentoring possibilities is extensive, the survey indicates that respondents are not aware of the assortment of available options. For example, only 19 per cent of respondents are aware of the concept of “lean-in circles”, as popularised by Sheryl Sandberg in her 2013 book, Lean In. The remaining 80 per cent are either unaware or have limited knowledge, in broadly equal proportions. Given the high level of interest in mentoring initiatives, the WIS committee is considering the establishment of an informal mentoring programme which may take the form of, or adopt elements from, lean-in circles. Survey respondents express a desire to receive more WIS communications, particularly in email format. The survey suggests that WIS communications should include more content on upcoming WIS events and opportunities to be involved, profiles of women in the securitisation industry – including success stories, career advice and tips for other women – and articles on issues affecting women and workplace diversity, such as unconscious bias and flexible work arrangements. The WIS subcommittee welcomes this feedback and is pleased at the level of member engagement shown. The committee intends to circulate email communications and publish industry articles on a regular basis. The WIS subcommittee thanks the women who took the time to participate in the survey – to provide guidance around where energy and resources should be devoted. The transparency and honesty of the responses is valued. ■ 11
FEATURE
BACK IN BUSINESS After a years-long transition period as new regulation worked its way through the system, the Australian securitisation market finally has secure foundations for the future. Deal flow at the start of 2017 highlights a number of positive factors, including issuance diversity and robust global demand throughout the capital stack. BY LAURENCE DAVISON
T
he Australian structured-finance market existed in a state of semi-stability for most of the decade following the onset of the financial crisis. First came the liquidity crunch and the painful process of industry consolidation the seismic market shock prompted. At the turn of the present decade, the market was trying to re-establish itself – assisted initially by investment support from the Australian government via the Australian Office of Financial Management. In the background, and of critical importance, was the re-regulation process being conducted by the Australian Prudential Regulation Authority (APRA). This process finally reached its conclusion with the publication of the final version of the APS 120 standard in the second half of 2016 and the APG 120 practice guide in April this year. It has not all been doom and gloom on the way. The industry has made several important steps forward, including the introduction of Australia’s covered-bond regime in 2011 and domestic securitisation issuance reaching a high point of more than A$35 billion (US$26.2 billion) in 2014 – from less than A$10 billion in 2008. However, the fact that APRA has reached the conclusion of its process finally puts the market on a stable platform for the future. While industry participants do not view some aspects of the new regime as market-positive – the application of generally higher risk weights to warehouse facilities in particular is expected to increase cost for warehouse providers
and thus users – most agree that it is at least supportive of issuance diversity and innovation in public markets.
EARLY-YEAR ISSUANCE Taken at face value, Australian dollar securitisation issuance has been encouraging since the start of 2017. The first-quarter total of A$8.6 billion is the second-highest since the financial crisis (see chart on facing page) and an ongoing pipeline through April and May suggests the annual record may be beaten. According to KangaNews data, 10 transactions printed in the first quarter of 2017, a further two in April and at least another four were circling in early May. The picture is, if anything, even more positive when it comes to issuance diversity. The bumper issuance years of 2013 and 2014 were swollen by jumbo residential mortgage-backed securities (RMBS) flow from Australian big-four bank issuers, which market sources say were in large part swallowed by other bank liquidity books as these investors went through the one-off expansion phase required to meet liquidity-coverageratio requirements. In other words, while volume was high it was driven by interbank transaction flow that provided only limited benefit – and even less on an ongoing basis – to the plurality of issuers. Issuance volume in 2017 has been robust despite the near-absence of major-bank issuers, and the total lack of RMBS from these names (see chart on p16). Commonwealth Bank of Australia (CommBank) priced a A$2 billion RMBS in December 2016 and Westpac Banking Corporation (Westpac) added a A$2.15 billion auto-backed securitisation in February this year, but major-bank treasurers have downplayed the RMBS option in the new year. “A funding-only RMBS transaction has very little appeal for us in the current environment,” said Rick Moscati, Melbournebased group treasurer at ANZ Banking Group (ANZ) in late March, at the KangaNews DCM Summit. ANZ made its long-awaited return to the securitisation market in November 2016 with the print of a A$2 billion new RMBS. With the full capital structure being externally placed, this transaction also offered the issuer capital relief. But Moscati says even this has a marginal benefit for a bank the size of ANZ. “Our breakeven point was that a capital-relief transaction just got over the line relative to senior. Absent this, one would argue the amount of capital relief from an RMBS transaction is quite tiny, if not inconsequential.”
“The first half of last year was quite tough in the RMBS market but it looked better at the back end of the year. We have been the first securitisation issuer of the year on occasions in the past, though, so we were comfortable to move early in 2017.” JAMES SHAW BANK OF QUEENSLAND
12 · Australian Securitisation Journal | Issue 12_2017
REGIONALS STEP IN The most positive news of all for Australian securitisation issuers is that while the major banks may not be finding the same scale of peer-based demand they tapped in 2013-14, their relative absence from the market does not appear to be a sign that there is no demand at all. In fact, issuers that have tested the waters in 2017 have been rewarded with large deal sizes and healthy oversubscriptions right through the capital structure. The year’s first RMBS movers came from the regional-bank sector. Bank of Queensland (BOQ) was first out of the blocks, pricing a A$1 billion mortgage-backed deal in early February. Suncorp Bank (Suncorp) followed before the end of the month with a A$1.25 billion RMBS, while Bendigo and Adelaide Bank added A$850 million to the pipeline in early March. BOQ’s REDS 2017-1 Trust is a six-tranche prime-mortgage securitisation which offered a margin of 113 basis points over one-month bank bills for its A$920 million class A1 notes. All six tranches were externally placed, allowing BOQ to register capital relief equivalent to 5 basis points of common-equity tier-one capital according to the issuer. NAB arranged the transaction, joined by CommBank, Macquarie Bank and Westpac Institutional Bank as joint leads on the A1 notes. BOQ launched its deal into an Australian market in which the positive tone of credit issuance surprised some participants after a subdued end to 2016. Jonathan Mintz, associate director, securitisation origination at NAB in Melbourne, says: “The transaction saw a good number of accounts overall and notable diversity – including participation from offshore and some new names.” Mintz adds that the slow end to 2016 meant investors had cash to deploy at the start of the new year. Meanwhile, names like BOQ and other regional banks had not given the RMBS market a large volume of supply in recent months.
AUSTRAL IAN DOL L AR SECURITISATION ISSUAN CE Q1
Q2-4
40,000 35,000
30,400
30,000 VOLUME (A$M)
A similar message on the appeal of RMBS came from Shaun Dooley, group treasurer at National Australia Bank (NAB) in Melbourne. Also speaking at the KangaNews event in March, he said: “We will continue to issue funding trades but they remain a small part of our total issuance. There is some demand but it is coming off, particularly as bank balance sheets refrain from buying at the levels they used to. With the economics, unless there is a sensible outcome on a capital-relief trade there is not much else to make it compelling.”
21,744
17,722
25,000
19,969
20,000 15,000
14,499
10,000
10,821 8,285
5,000 0
8,563
5,989
3,958
858
2012
2013
2014
2015
2016
2017
S O U R C E : K A N G A N E W S 4 M AY 2 0 1 7
James Shaw, head of funding at BOQ in Brisbane, says the deal was an overdue return to RMBS issuance. The bank’s expectation is to be active in securitisation markets – for either or both of RMBS or ABS issuance – at least once each year. The fact that it did not price a new benchmark securitisation transaction in 2016 was the consequence of conducive seniorunsecured markets rather than a longer-term change in strategy. “The first half of last year was quite tough in the RMBS market but it looked better at the back end of the year and we believe we could have issued then,” Shaw comments. “We have been the first securitisation issuer of the year on occasions in the past, though, so we were comfortable to move early in 2017.” Similarly, Shaw suggests the fact that BOQ chose to issue a capital-relief transaction is a return to its normal approach to RMBS issuance rather than a new direction. He says: “We have seen the market becoming more conducive to capital-relief trades of late. It’s something we’ve done in RMBS deals up to the earlier part of this decade, but seeing transactions like [ANZ’s] Kingfisher RMBS last year gave us confidence that we could do capital relief in size.”
PRICING WORKS Securitisation’s appeal has ticked up for regional banks in part thanks to improved relative pricing. CommBank printed 2016’s final Australian RMBS deal, at 111 basis points over bank bills
“There is no doubt the breadth and depth of the subordinated investor market has changed significantly in the past 12 months. The number that can take out entire tranches or invest all the way down to the equity piece has grown substantially.” SIMON LEWIS SUNCORP BANKING AND WEALTH
13
FEATURE
A high degree of Latitude IF ONE TRANSACTION SUMS UP THE AUSTRALIAN SECURITISATION MARKET’S WILLINGNESS TO EMBRACE DIVERSITY AND INNOVATION, IT IS THE DEBUT PRICED BY LATITUDE FINANCE AUSTRALIA (LATITUDE) AT THE END OF MARCH. Not only was Latitude a new name – albeit one that emerged from the longstanding GE Capital Finance (GE) business – but, to most Australian investors, it offered both a new collateral pool, in credit-card receivables, and the market’s first master-trust structure. Appealing pricing and extensive predeal marketing enabled Latitude to attract a multiple-times oversubscription to all tranches of its debut asset-backed securities (ABS) issue, according to deal sources. Bank of America Merrill Lynch (BAML) arranged the transaction and acted as lead manager alongside Deutsche Bank and National Australia Bank (NAB). The deal had total volume of A$1.1 billion (US$822 million) including A$100 million of retained notes. Lead-manager data show that the whole structure was significantly oversubscribed with particularly strong bids coming in for the mezzanine and subordinated notes. Issuer and leads say the transaction was always expected to see significant offshore distribution given the relative familiarity of investors in Europe and Asia with both credit-card collateral and master trusts.
In the end, 38 per cent of paper was sold to accounts in the UK and Europe, Asian buyers took 33 per cent, Australasians 28 per cent and the remaining 1 per cent went to the US. Real money dominated, accounting for nearly three-quarters of the transaction overall, with the remainder going to balance sheets.
Predeal marketing Latitude conducted an extensive roadshow on- and offshore ahead of its debut. Lionel Koe, Melbournebased director, securitisation origination at NAB, says the feedback provided by investors in the UK – where master-trust and credit-card issuance is well established – was particularly timely and constructive as the deal process progressed. In fact, the leads believe the deal’s extended lead time contributed significantly to the level of interest it eventually attracted. Tristan Cheesman, director and head of EMEA structured-finance syndicate at BAML in London, explains that while distribution may have been naturally limited to the subset of investors with the ability to swap or with natural Australian dollar liquidity, Latitude allowed a greater bid to amass by
for its 3.5 year weighted-average life (WAL) largest tranche. The same issuer reopened the local senior-unsecured bank market in January this year, also attracting a margin of 111 basis points
running a longer deal process including extensive nondeal roadshows dating back to 2016. This result was the fortunate byproduct of a necessary process. “An in-depth marketing and investor education process was critical to the success of the transaction as we were presenting a new name to the market in Latitude, with what is effectively a new collateral type in credit cards and a new structure in the master trust,” suggests Tim Richardson, director and head of securitisation at Deutsche Bank in Sydney. Cheesman adds: “This isn’t always needed, but for a new borrower with a new asset class and ambitions to become a programmatic issuer it was certainly extremely useful to meet investors to discuss the business, expansion plans and the like.” Latitude itself emphasises its desire to become a regular issuer, and agrees that in this context it was important to run an extensive predeal marketing effort and a measured transaction approach – especially when it came to volume. Paul Varro, the issuer’s Melbournebased treasurer, says Latitude is keen to be active on an annual basis, conditions allowing. With this in mind,
over swap for five-year bonds. BOQ sold its 2.8 year WAL top tranche just 2 basis points wider. Arkady Lippa, Melbournebased director, frequent-issuer coverage at NAB, says this is a very favourable outcome relative to the deals printed by the larger CommBank. “In every one of our auto trades Suncorp also reports a positive pricing outcome we have consistently ended up for its RMBS return. Apollo Series 2017-1 Trust (Apollo with a dozen or so investors, 2017-1) was a highly cost-competitive funding option, the issuer says, thanks in part to the capital relief and every transaction has seen participation from new accounts.” generated by support from investors right down the deal structure. Apollo 2017-1’s A$1.15 billion of class GUY VOLPICELLA WESTPAC BANKING CORPORATION A notes offered a margin of 113 basis points over one-
14 · Australian Securitisation Journal | Issue 12_2017
the issuer did not want to saturate the market despite encountering a high level of demand for its debut. He adds: “We didn’t have a hard volume cap but we wanted to retain capacity to allow us to become a programmatic issuer in future. For this reason it was important for us to retain discipline even as the deal book grew.”
Domestic interest An extended marketing process was also helpful in Australia, as the transaction team says it was conscious that it was marketing a new asset class and structure. Koe explains that Latitude’s performance track record and availability of historical data added to investor comfort. However, the team also allocated significant time to discussing the asset class and structure. Varro says Latitude was very pleased with the level of domestic engagement it received in the debut deal. “There was certainly more work needed on the master-trust structure in the domestic arena,” Varro acknowledges. “In addition, investors wanted to understand what Latitude is and how it emerged from GE’s consumer-finance business.” He adds: “Local investor engagement is a crucial part of Latitude’s funding programme, but there was no specific target for the local-versus-international mix for the inaugural deal. With the deal now
priced and the new master-trust structure in place we believe ongoing local investor engagement should be strong.” On the master-trust structure in particular, Koe reveals: “Some of the key questions surrounded ensuring asset quality in the revolving portfolio, describing the interactions of this debut issuance relative to future transactions from the perspective of credit enhancement, cash flows – both principal and interest – and structural features of the transaction such as pay-out events.” Overall, Koe describes a deal process in which a positive feedback loop developed. He says early interest gave the leads confidence to launch a transaction at A$750 million, while incoming bids facilitated an upsize to the capped final volume and also allowed the deal to test and eventually tighten pricing. There is still latent demand for the new asset class, Koe adds. He explains: “There were a few investors that looked at the deal but chose not to participate on the basis that they wanted to see this sector and structure develop further in the domestic market before committing. Given the success and quality of the book I anticipate future participation from these accounts.”
Lower-rated bid Demand stretched well beyond the senior notes. Cheesman comments:
month bank bill swap rate (BBSW) for 3.3 years of WAL. NAB arranged the transaction and acted as a joint lead manager alongside ANZ, Deutsche Bank and Macquarie Bank. Simon Lewis, deputy treasurer at Suncorp Banking and Wealth in Brisbane, says the all-in cost of the new RMBS was comparable with where the bank might expect to print five-year senior-unsecured paper under the same market conditions. Two unsecured bank transactions with five-year tenor priced in Australia around the same time as Apollo 20171. Coöperatieve Rabobank Australia Branch issued at 108 basis points over swap on 24 February while ANZ achieved a margin of 100 basis points over swap on a 27 February deal.
“We know there is a relatively well-established bid for Australian senior notes from both domestic and offshore accounts. The latter can be somewhat transient depending on spreads and their volume of currency available at any point in time, but we were pretty confident it would come through for this deal. What surprised us was the level of engagement with the lower-rated notes.” Richardson is also encouraged by the demand Latitude uncovered from a whole-market perspective. “The level of investor interest in consumer ABS and the master-trust structure delivering soft-bullet bonds reflects the ongoing development of the Australian securitisation market and its increasing relevance to global investors,” he claims. “This transaction forms part of a broader theme whereby consumer ABS collateral [that was] originally balancesheet funded is successfully finding its way into public ABS programmes.” Despite the offshore interest and relative intensity of the domestic investor-relations effort, Varro says Latitude decided fairly early in the deal process – which stretches back to inception around six months ahead of pricing – to focus on an Australian dollar deal rather than to use the ability of master trusts to facilitate foreign-currency tranches. Offshore issuance remains a possibility for the future, Varro adds, with US dollars of notable appeal.
Headline margin does not tell the full story in a comparison between RMBS and senior unsecured, however. Lewis reveals that the weighted-average margin over time of Apollo 2017-1’s full structure is 133 basis points over one-month BBSW, but a one-month to three-month swap benchmark comparison reduces the all-in margin of the mortgage-backed transaction by 15 basis points. Suncorp was also able to sell the full RMBS structure comprising six note tranches. Although capital relief is not officially recorded as a margin benefit, Lewis confirms that “as a standardised bank, Suncorp also receives a considerable cost benefit as a consequence of capital relief”. 15
FEATURE
AU ST RA L I A N D OLL A R S E C U R IT IS AT IO N IS S UAN CE BY A SSE T T YPE
100
Big-four bank RMBS
Other RMBS
Big-four bank ABS
Other ABS
2,888
3,881
4,324
4,627
2,721
1,365
80
1,000 14,672
20,144
1,200
800 4,949
1,300 11,710
2,150
70
8,250
ISSUANCE PROPORTION (PER CENT)
90
60
6,018
50 40 10,475
30 20 10 0
11,921
8,167
8,196
3,020
2012
2013
2014
2015
2016
2017 YTD
* Note: bars show percentage of total but data labels show volume (A$m) per time frame. S O U RCE: KAN GAN EWS 4 M AY 2017
SUBORDINATED DEMAND In this context, the support Apollo 2017-1 received from subordinated investors is a notable success story – but one that has been mirrored by Australian securitisation transactions issued throughout 2017 to date. Deal sources on a range of transactions in 2017 have repeated the observation that lower-rated demand is not just deeper but also broader. Ernest Biasi, executive director, debt markets securitisation at CommBank in Sydney, tells ASJ: “There is a much larger investor base looking at subordinated tranches compared with prior years – from new investors as well as traditional triple-A buyers that are now looking further down the capital structure.” In fact, Lewis suggests demand down the capital structure appears to be at an almost unprecedented level. He reveals that a combination of growth in offshore mandates coming to Australian boutique funds, a high level of liquidity in general, the ongoing hunt for yield and faith in the quality of Australian product provided fertile ground for Suncorp’s lowerrated tranches. “There is no doubt the breadth and depth of the subordinated investor market has changed significantly in the past 12 months,” Lewis comments. “The number of accounts that can take entire tranches or invest all the way down to the
equity piece has grown substantially, and indeed most of the investors we saw participated in multiple tranches.” Lewis reveals that some of Suncorp’s lower-rated notes attracted 7-8 times oversubscription including bids for entire classes of notes, while individual tranches generally attracted buyers in the high single figures. Issuers report they are actively structuring deals to meet investor preferences, especially further down the capital structure. For instance, offering lower-rated notes that did not depend on lenders’ mortgage insurance (LMI) pool cover for their credit enhancement likely enhanced the appeal of the Suncorp deal to subordinated investors. Craig Stevens, director, securitisation origination at NAB in Melbourne, says some accounts have expressed a preference for “hard” credit enhancement rather than that supported by LMI pool cover. This reduces rating dependency in a transaction in the event of rating migration on LMI. He adds: “It potentially broadens the subordinated investor base though we have seen strong demand for different risk tranches across a number of trades in more recent times. By contrast, some senior investors continue to prefer LMI pool cover.”
OFFSHORE BID Another feature of Australian securitisation demand in the first part of the new year has been the strong bid from offshore. Indeed, some local fund managers say they have been compelled to soften their natural tendency to favour top-rated notes due to price compression driven by international buyers’ demand for class A tranches. Offshore interest featured for both BOQ and Suncorp. Nearly 15 per cent of BOQ’s total transaction volume was placed with offshore investors. Shaw confirms that growing global investor engagement with BOQ’s issuance across asset classes is a definite goal. “The offshore bid in this deal probably slightly exceeded our expectations, although nowadays we tend to see around 25 per cent offshore distribution of our senior-unsecured deals,” he reveals. Lewis highlights Australian real-money and balance-sheet interest, good conversion from the issuer’s early-2017 UK roadshow and the revolution in demand for notes down the capital structure. Books reached close to A$2 billion, Lewis adds – a level of RMBS oversubscription the issuer has not enjoyed for some years.
“Our breakeven point was that a capital-relief transaction just got over the line relative to senior. Absent this, one would argue the amount of capital relief from an RMBS transaction is quite tiny, if not inconsequential.” RICK MOSCATI ANZ BANKING GROUP
16 · Australian Securitisation Journal | Issue 12_2017
For offshore investors, a marginal repricing of Australian RMBS notes added to the appeal. “The A notes in the new deal priced 23 basis points wider than those in the RMBS we issued in 2015, and the additional margin was crucial to meeting offshore accounts’ hurdle rates,” Lewis says. “There are very few natural Australian dollar investors in Europe, and of the others it is clear that some are prepared to meet the basis swap costs at 113 basis points over BBSW in a way they won’t in the 80s and 90s.”
NONBANKS FOLLOW Regional banks may have been the first beneficiaries of Australia’s healthy structured-finance market at the start of 2017, but the most active sector by number has been nonbank issuers. Seven of the 12 Australian dollar deals priced by 7 April came from nonbanks, with six of these pricing after midMarch. With the market less dependent on the bank liquiditybook bid, the resurgent demand found by regional authorised deposit-taking institution (ADI) transactions has been largely mirrored in the nonbank sector. CommBank’s Biasi suggests nonbank issuance has been driven by a combination of stronger interest from domestic real money, increased offshore participation – particularly from Asia – and the fact that some recent nonbank RMBS deals were structured specifically to attract US demand. RedZed Lending Solutions (RedZed) issued its third securitisation of nonconforming mortgages at the end of March, raising A$300 million in a CommBank- and NAB-led deal, and the issuer notes interest across the deal structure. Evan Dwyer, managing director at RedZed in Melbourne, says the company experienced far greater demand than it has seen in previous transactions. “What is interesting is that there was stronger demand all the way through the structure on this occasion,” he reveals. “In the past we have been able to sell the mezzanine tranches and we have had lots of demand for the senior. But there was lots of demand for our latest deal all the way down the capital structure.” This may be because of a combination of diversity of demand and institutional investors’ ongoing hunt for yield. There is also a clutch of nonbank issuers – including names like RedZed, La Trobe Financial, Think Tank Group and FlexiGroup – that are somewhat or significantly progressed on the journey from being new to regular issuers.
Dwyer continues: “We saw some new investors in this transaction. In particular, some mezzanine investors participated that we have talked to previously but we haven’t seen come in before. We have now been in front of investors consistently for 10 years. These investors have all heard the story, but they get comfortable when over time the pool reflects the story.” In the long term, market participants expect the new capital requirements on warehouse facilities to increase lenders’ marginal incentive to term out collateral in the securitisation market. More expensive warehouse facilities should make capital markets – conditions permitting – a more appealing proposition.
ABS OPPORTUNITIES Issuance diversity has also spread to the nonmortgage sector. As well as the debut from Latitude Finance Australia (see box on p14), Q1 this year also saw Australia’s largest-ever ABS from a big-four ADI and its second accredited green securitisation of consumer-finance receivables – from FlexiGroup. Westpac priced Crusade ABS Series 2017-1 Trust on 17 February having increased the size of the auto-backed deal to A$2.15 billion from A$750 million at launch. The largest public tranche – A$741 million of class A1 notes – priced at 100 basis points over bank bills. The structure also included A$1 billion of privately placed A2 notes. Guy Volpicella, Sydney-based executive director and head of structured funding and capital at Westpac, says the fact that the bank issued its auto ABS during a period of substantial RMBS supply provided a point of differentiation for investors. “Some investors prefer auto ABS to RMBS,” Volpicella comments. “This is the value of diversification for us. When you consider the large number of RMBS transactions that have been completed in the last 3-4 months and the number of RMBS transactions that have been announced, the different product allowed us to print the largest-ever ABS auto trade in the domestic market.” Auto ABS outcomes are driven by a rotating pool of investors, not all of which may be active at any time. “This means you need to continually expand the universe of investors that is comfortable buying the ABS product,” Volpicella suggests. “In every one of our auto trades we have consistently ended up with a dozen or so investors, and every transaction has seen participation from new accounts.” ■
“In the past we have been able to sell the mezzanine tranches and we have had lots of demand for the senior. But there was lots of demand for our latest deal all the way down the capital structure.” EVAN DWYER REDZED LENDING SOLUTIONS
17
COPUBLISHED ROUNDTABLE
Consumer finance’s securitisation breakout ◆
Australia’s consumer-finance sector is in the middle of a quiet revolution as new players and enhanced business models expand the distribution network and broaden the range of active players. National Australia Bank (NAB) hosted a roundtable with ASJ in Sydney this May to discuss the shape of the market and how it will interact with structured finance going forward. PARTICIPANTS ◆ Dylan Bourke Portfolio Manager KAPSTREAM CAPITAL ◆ Larry Diamond Founder and Chief Executive Officer ZIPMONEY ◆ Peter Gray Founder and Chief Operating Officer ZIPMONEY ◆ Lionel Koe Director, Securitisation Origination NATIONAL AUSTRALIA BANK ◆ Todd Lawler Group Treasurer PEPPER GROUP ◆ Steven Mixter Head of Funding LATITUDE FINANCE AUSTRALIA ◆ Vivek Prabhu Head of Fixed Income PERPETUAL INVESTMENTS ◆ Sarah Samson Head of Securitisation Origination NATIONAL AUSTRALIA BANK ◆ Jennifer Schlosser Partner ASHURST ◆ Paul Varro Treasurer LATITUDE FINANCE AUSTRALIA MODERATOR ◆ Laurence Davison Managing Editor KANGANEWS
GROWTH POTENTIAL Davison The consumer-finance sector has been
on the radar for the Australian securitisation market for a while but there now seems to be more expectation around issuance volume and consistency. Let’s start by talking about the opportunity set for consumer lenders – where is growth coming from? ◆ LAWLER
We see consumer finance as a good complement to our existing businesses in prime and nonconforming mortgages and auto finance. We want to be a diversified nonbank financial institution, and for us the opportunity is to leverage the distribution footprint we have already built – whether it be mortgage brokers, auto distribution channels or direct to customers. More generally, our IP has always been around credit underwriting and really understanding the borrower. Being able to put this into an electronic, easy-to-use format for the customer makes us a lender with deep credit experience embedding our skills in technology, rather than a technology company trying to take advantage of a lending opportunity. ◆ DIAMOND There is a very significant role for technology, and it is the development we have seen in the past 5-10 years that has really allowed digital-age businesses like ours to get a foothold in the consumer-finance sector. What I’m talking about specifically is ‘decision technology’, allowing consumers to have a seamless onboarding experience in a retail-finance environment. The areas we have focused on to access distribution are around innovation into retail point of sale. The changes we have seen in point-of-sale technology allow consumers seamless onboarding, but it’s also critical to for us to build an origination and credit-modelling environment that allows us to onboard a consumer in real time. ◆ GRAY The contemporary environment is a great one for a platform like ours, with no legacy issues. We can adopt the latest technology in ways that secure engagement with millennials and other emerging prime customers in a way that perhaps doesn’t exist in other financial institutions at present.
Davison For a technology-driven company
like zipMoney, why is it consumer finance in particular that seems to provide the best opportunity to deploy your platform rather than anything else? ◆ GRAY
We have a traditional approach when it comes to things like lending standards and credit validation. The technology aspect is more about what we bolt onto this – such as using big data to make more informed decisions in real time. Risk management is a core function of our business and is something we believe we do very well – we are just enhancing this by using considerably more data points. 18 · Australian Securitisation Journal | Issue 12_2017
◆ VARRO
I don’t see these things as being separate, and in fact we have quite a similar approach at Latitude Finance Australia (Latitude). We have many years of lending experience, and indeed in the first public issue under the Latitude name a lot of the positive investor feedback was around our track record. The opportunity is to blend this with additional data and realtime decision making. You absolutely have to marry the two in order to survive. Track record is key to the decision-making process, but it also has to be brought up to date and made relevant to millennial borrowers. ◆ LAWLER I agree. The ultimate credit decision has to come from a base of experience – and we have very well-established personal-loan businesses internationally, so we know what to look for and what to do. But having technology to overlay is also absolutely crucial, because no customer in this market is going to come into a clunky, outdated process. I’d be interested to hear how investors rate this combination, and what they’re looking for in issuers. ◆ BOURKE Both technology and credit experience are important in a lender. One focus is determining if the lender
has competitive advantage or if it is adversely selecting borrowers that do not have the option of obtaining traditional forms of finance. Fortunately, adverse borrower selection is unlikely for existing consumer asset-backed securities (ABS) receivables originated at the point of sale or through sales-finance cards. It makes sense for retailers to promote nonbank lenders to customers due to their expertise in providing quick application and decisioning processes. Quick financing may improve customer conversion rates or increase customer basket sizes, which are important to retailers. ◆ SAMSON From a securitisation perspective, I believe the market – including warehouse providers – will weed out the lenders that don’t have the credit fundamentals to go hand-in-hand with the technology. There are players out there that have one or the other but, as Paul Varro says, it’s really necessary to have both. ◆ DIAMOND On the flip side, I think Latitude is a perfect example of the fact that high-quality customers in Australia are attracted to interest-free finance – for its strong credit and payment flexibility.
“MANY MILLENNIALS MIGHT NOT EVER HAVE MET A CREDIT FINANCIER, WHILE AT THE SAME TIME OUR DATA IS TELLING US THEY ARE ATTRACTED TO LIFESTYLE AND OTHER LENDING CATEGORIES – EVEN HEALTH SERVICES.” LARRY DIAMOND ZIPMONEY
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Master trusts in action AFTER YEARS OF DISCUSSION ABOUT THE USE OF MASTER-TRUST STRUCTURES IN AUSTRALIA, LATITUDE FINANCE AUSTRALIA (LATITUDE) FINALLY GOT THE BALL ROLLING WITH ITS DEBUT DEAL IN APRIL (SEE P14). THE STRUCTURE WORKED FOR THIS ISSUER, BUT FURTHER TAKEUP WILL LIKELY BE LIMITED.
Davison While the use of a master trust enables more costeffective cross-currency swaps, Latitude still elected to issue its debut deal exclusively in Australian dollars. What was the thought process here? VARRO As well as offering a new
structure in Australia – master trusts – we were also conscious we were coming to market as a new issuer and with a new asset class for the domestic market. In this context, going with an all-Australian dollar transaction was partly because of our desire to limit the number of variables to the ones we had to deal with. We borrowed the best from the US and Europe when it came to structure, which gave us confidence that we would attract good offshore demand. In the end we got excellent support, with investors in London and Tokyo especially prominent. For us to get three landmark Japanese investors in the book of our inaugural issue was a very big deal. It’s certainly true that the offshore investors we met were very familiar with the asset class and the structure, so the questions were really around
the Latitude name – including how we emerged from GE Consumer Finance and our plans for the future. In Australia, there was a lot more interest in the master-trust structure and more education required. MIXTER An interesting thing that emerged from the roadshow was that the soft-bullet note structure facilitated by the master trust made offshore investors happier to buy Australian dollars and swap to their own currencies – certainly relative to a pass-through structure. I’d be tempted to flip the conventional wisdom about soft bullets on its head and say they actually make it easier to find demand for Australian dollars and thus reduce the need to issue in foreign currencies. This phenomenon isn’t unique to securitisation. In bond markets such as US private placement we are seeing a growing number of investors willing to buy in an issuer’s local currency and do the swap themselves.
Davison What are the complexities of issuing out of master trusts when it comes to the structuring side?
We have already mentioned the millennial customer a couple of times, but I think it’s important to explain the significance of this segment. Many millennials might not ever have met a credit financier, while at the same time our data is telling us they are attracted to lifestyle and other lending categories – even health services. This all comes through in the underlying profile of our lending books. ◆ VARRO The rationale of point-of-sale stacks up better than most loyalty propositions on a credit card when it comes to the hard benefits a customer gets. This is why we see a good spectrum of customers across our portfolio. ◆ DIAMOND There are two ways to think about the consumer. One is how to convert a browser into a customer using promotional finance. The other is a white-label approach – accessing a whole population of consumers, for instance 20 · Australian Securitisation Journal | Issue 12_2017
SCHLOSSER Master trusts make sense
to issuers if they are confident they will have sufficient future origination volume to take advantage of the revolving features. They may not be the right choice for smaller issuers – there is a volume threshold below which issuers may encounter transaction triggers. But I think the Latitude experience would be a very appealing precedent for issuers, both bank and nonbank. Technical issues under the new APS 120 and APG 120 – the latter of which was only released in late April – will need to be structured for in the case of a bank undertaking a master trust. This is particularly the case where credit-card receivables are involved, notably in the context of funding credit-card requirements in an amortisation scenario.
Davison If master trusts are difficult for banks but also require significant scale of underlying assets, how long is the list of issuers that could potentially benefit? LAWLER My guess is that it runs to
Latitude – exclusively.
Coles or Myer customers – and offering them a digital credit solution. The latter involves different psychology from traditional point-of-sale finance, even though they get classed together in the same basket.
Davison NAB obviously covers a range of clients
in the consumer-finance sector. To what extent are business models converging versus different lenders taking unique approaches? ◆ SAMSON
I think there is some convergence, as we’ve discussed – lenders in this space all need to have solid credit foundations and leading-edge technology, because this is what customers are looking for. But each borrower we deal with is nuanced, whether it be the rationale for being in this space, technology or distribution channels.
KOE I believe issuers will look at using
master trusts for residential mortgages. As Jennifer Schlosser says, some regulatory complexities specific to credit cards remain. I think the next step of evolution in Australia will be for residential mortgage-backed securities (RMBS) issuance, especially on the funding-only side. In general, I think the banks – majors, large and regional – will be interested in master trusts backed by residential mortgages. Cards will be harder to justify purely from a cost-offunds perspective – unless card-backed deals start pricing tighter than RMBS. SCHLOSSER For banks that don’t yet have covered-bond programmes but have origination of a sufficient volume, it might make sense to streamline warehousing arrangements and try to create a revolving master trust. LAWLER Our starting point is the desire to understand what investors need and what they are looking for. Pepper Group has been securitising mortgages for a long time, and in this context what we like about auto and consumer finance is
the fact that they give us more ability to engage with investors – around things like duration, risk profile and relative value. What I’m saying is that if you have a self-liquidating asset with lots of margin and good volume, you don’t need to have a master trust to structure something that works well for investors across the capital stack.
Davison What did Australian investors need to get comfortable with when looking at a mastertrust transaction? BOURKE It’s all to do with the revolving
nature of the structure and the fact that you can get further receivables in the pool. We have to think about the incentives of the originator, specifically whether we are confident they will maintain origination standards over time or might be tempted to let them deteriorate – and thus put worse receivables in the pool. We got comfortable with this in Latitude’s case, but with any revolving pool we would have to be comfortable
with what we believe we will get in future. To some extent it is always going to be an unknown, but we can look at historical data and continue to monitor on an ongoing basis. LAWLER Issuers can put in place parameters and restrictions around what they can add to the pool, which should offer some comfort to investors about the characteristics of a revolving pool in future. Issuers aren’t able to relax their underwriting criteria completely. This also relates to my point about understanding what investors are looking for. If we speak to an investor and are told there is concern about deteriorating lending criteria, we can offer to put in place additional clauses preventing us from doing so. MIXTER Our structure has a cap – 15 per cent in any three-month period and 20 per cent in any year – of new accounts we can add to the pool unless we get a rating confirmation. This means we can only move the portfolio a certain distance from where it is today without getting external ratings validation.
“I’d be tempted to flip the conventional wisdom about soft bullets on its head and say they actually make it easier to find demand for Australian dollars and thus reduce the need to issue in foreign currencies.” STEVEN MIXTER LATITUDE FINANCE AUTRALIA
What I’m saying is that credit and technology have converged to some extent, but individual lenders retain their own unique competitive advantages. This combination allows securitisation to make sense as the funding platform of choice, as opposed to peer-to-peer or corporate debt. ◆ KOE Technology has evolved considerably in the last few years and this has facilitated a number of lenders diversifying into consumer – unsecured – finance from their traditional place in the mortgage sector. These issuers have capitalised on their existing data sets and risk-based pricing models and have harnessed technology to integrate and broaden their product offering. There are other players, often new entrants, that hail from the technology space and are rapidly harnessing this technology into both originations and credit. Others simply see an opportunity in a relatively benign economic cycle.
The outlook for the asset class is positive and the ability to use technology to really understand credit quality and borrower behaviour is extremely powerful. A deep understanding of each issuer’s strategy and capabilities is paramount, because we want to be familiar with a lender’s ability to understand and price for risk and eventually successfully term out into the capital markets.
Davison Should we expect to see a more diverse
market when it comes to the number of lenders, or consolidation and thus larger books held by fewer names? ◆ SAMSON
There are a lot of players in this space, some of which I am not even aware of. But only a few of them have made it to a place where securitisation makes sense – ie scale, 21
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track record and equity base. Most of the others are just starting, and as always some will make it and others will not.
OPPORTUNITY SOURCES Davison In the mortgage space, it’s fairly
clear that some of the main opportunities for nonbank lenders have been spun out of the process of bank capital regulation, which has made some forms of lending – specifically nonconforming – less appealing to banks. Are there any legitimate parallels to be drawn with the consumer-finance sector? ◆ LAWLER
Consumer finance is more of an extension of what we are already doing. We would like to be able to provide any customer with a mortgage, auto loan or personal loan. There are opportunities to link facilities to more than one product, that we have yet to explore fully but plan to do so in future. We also believe – and this goes equally for our businesses offshore – the consumer-finance sector is underserved by major banks. It’s not as clearly delineated as in the mortgage space, where there are certain types of lending banks just can’t do. But there are parts of the economy where the banks aren’t as engaged as they could be. The consumer-finance space is a little more fluid than mortgages when it comes to borrower types. There is a hard line in mortgages between what is mortgage-insurable
and what is not. In our consumer lending – both personal loans and autos – we price for risk across the board and we look at customers we classify as ‘A, B or C’. We look at their circumstances and price accordingly. What this means is that we lend across the demographic range, with the exception of deep nonconforming – we always make sure the borrower has the ability to repay. We have been able to find market share and opportunities to win customers pretty much across the board in consumer lending. We will struggle to compete with the major banks for someone who is a ‘prime-prime’ mortgage customer, but in the auto and personal-loan space, where pricing is generally a little wider, there is a bit more margin to play with and thus a bigger opportunity. ◆ VARRO I think the point here is that, in this sector, opportunity goes back to customer experience to a significant extent. It’s all very well having great underwriting ability but it’s vital to align it with a superior, frictionless customer experience. Obviously the underwriting standards have to be there, to ensure growth is responsible. As for the question of competition, we don’t compete head to head with traditional loyalty programmes in the card space – which is typically where the banks have the greatest market share. We see further expansion potential in the sales-finance space, including scheme usage for everyday spend. We have just signed an exclusive relationship with PayPal, for instance, and we see a lot of opportunity in this relationship.
“AN INTERESTING THING WE HAVE SEEN OVER THE PAST 18 MONTHS IS A TIGHTENING OF THE RELATIVE SPREAD BETWEEN ABS AND RMBS IN AUSTRALIA. IT IS DEFINITELY A TREND, AND I THINK IT IS VERY POSITIVE TO SEE A RECOGNITION OF THIS TREND IN THE INVESTOR BASE.” LIONEL KOE NATIONAL AUSTRALIA BANK
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“INVESTORS NEED TO BE PAID FOR ILLIQUIDITY, SO ABS TRADES WIDER HERE. OVERALL, I THINK IT WOULD REQUIRE A SIGNIFICANT CHANGE IN ISSUANCE PATTERNS TO SEE THE RELATIVITIES CHANGE IN AUSTRALIA. THERE IS JUST SO MUCH MORE RMBS ISSUANCE.” DYLAN BOURKE KAPSTREAM CAPITAL
We have an incumbency advantage in the cards sector – over time we have built customer volume sufficient that we think it would be quite hard for the banks to come in with scale. Again, our business proposition is about leveraging this customer base and aligning it with the right technology solutions to make the end-to-end process as seamless as possible for customers and retailers. ◆ MIXTER The relationships we have with retailers are relevant here, too. I’m not sure whether banks would have the time it takes to manage these diverse relationships – or whether they would even want to. A large part of our model is based on relationships we have developed with the likes of Harvey Norman and The Good Guys, and this distribution channel is hard to replicate even if you want to try.
Davison As a newer entrant, does zipMoney
have targets when it comes to winning market share or is it more about growing the consumerfinance segment by reaching new consumers? ◆ DIAMOND
The pie is definitely growing, notwithstanding the fact that there are some established players that have already done a great job of building up substantial businesses. We look at the A$300 billion (US$224.2 billion) scale of annual spending in Australian retail and see a lot of opportunity for retail finance to expand across the category set and indeed for the market as a whole to expand. We believe we are opening up new products, new categories and new market entrants – facilitated by technology development. For example, we are moving into categories like health services – which is very big for out-of-pocket spend – including building deep relationships. Overall, we see a market that isn’t fully saturated and that has space for a range of players.
SECURITISATION SPECIFICS Davison What are the complexities of the
consumer-finance asset class when it comes to securitisation? ◆ SCHLOSSER
One of the first things we look at with online lending platforms is the additional layer of legislation relating to electronic transactions. This covers things like how an electronic contract is created, e-signatures and the steps a lender needs to take to obtain appropriate consents and disclosure to borrowers. Whether we are acting for the originators or financiers we look to cover off regulatory issues arising in the context of consumer lending. All the normal consumer-lending requirements also apply in this space – and indeed to small-business lending. For instance, as of November last year the unfair-terms legislation also applies to small-business lending. If we are acting for a financier, such as NAB, we will drill down into the detail of a consumer lender’s underlying asset class. This means aspects such as eligibility criteria, servicing requirements and termination events, audit rights and backup arrangements will be covered in documentation and supported by appropriate legal opinions in respect of the receivable terms – including online-receivable terms. When we are talking to a newer lender that might only have a year or two of origination history, we will likely be discussing things like getting an Australian financial-services licence and protecting intellectual property. All these aspects come into play more than is the case in the mortgage sector, especially with a more established lender. It’s about the business being robust in an electronic environment, and making sure the underlying fundamentals are being protected.
“THERE IS A HARD LINE IN MORTGAGES BETWEEN WHAT IS MORTGAGEINSURABLE AND WHAT IS NOT. IN OUR CONSUMER LENDING – BOTH PERSONAL LOANS AND AUTOS – WE PRICE FOR RISK ACROSS THE BOARD AND WE LOOK AT CUSTOMERS WE CLASSIFY AS ‘A, B OR C’.” TODD LAWLER PEPPER GROUP
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Warehouse changes bite A KEY IMPACT OF AUSTRALIA’S NEW SECURITISATION REGULATORY REGIME IS GENERALLY HIGHER RISK WEIGHTS DEMANDED OF BANKS PROVIDING WAREHOUSES – AND THUS HIGHER WAREHOUSE COSTS. CONSUMER LOANS ARE NOT IMMUNE, BUT THE CONSEQUENCES SHOULD BE MANAGEABLE.
Davison Will higher warehouse cost mean, at the margin, quicker progress from warehousing to public markets? KOE APS 120 means higher risk
weights for banks and, all things being equal, this will correspondingly affect warehouse financing. As market conditions allow, this may induce issuers to term out faster. However, this remains subject to prevailing costs and market conditions. The greater level of credit enhancement in consumer-finance warehouses also allows for a more favourable risk-weighted-asset treatment when assessing the relative merits of external ratings versus the supervisory approach. It will vary by asset class, but at the margin there is an incentive to term out quicker. Having said this, we don’t have velocity covenants and we will support our clients through the cycle.
◆ BOURKE
SAMSON The regulator wants
warehousing to be temporary and for issuers to access term markets whenever possible – and I think it will achieve these goals. But we also acknowledge that from time to time market conditions can be less favourable – and as a warehouse provider we have to support our clients through the less favourable phases. There is definitely more yield and spread on the asset side of consumer receivables. This helps with the warehouse situation, certainly in comparison with prime mortgages. LAWLER As an issuer, if the only assets we had in warehouses were tightly priced prime mortgages I think we would be pushed to term out more rapidly in the new environment. Our consumer-finance business is relatively young, and we have moved to understand and respond to the relevant APS 120 changes as quickly
Mortgage product is a little more vanilla – it’s somewhat easier to benchmark performance due to significant existing issuance. Consumer ABS is less vanilla. Investors need stable default-profile histories, including things like chargeoff data. One factor that helped with the Latitude deal, for instance, was consistent loss data through the financial crisis. Another complexity is that consumer receivables have small sizes combined with low recovery rates, which is different from mortgages or auto loans. The legal costs of pursuing borrowers for small receivables can be prohibitive with the main incentive being the threat of reporting borrower default to credit bureaux. This means investors must be careful of borrowers’ incentives to repay, rather than relying on a borrower’s legal obligation repay a deal. Short weighted-average lives can make revolving structures more economically efficient. This can add complexity. ◆ PRABHU For us, whether it is consumer ABS or anything else, we’re prepared to carry out the extra credit work where the underlying assets are not homogeneous provided we are getting paid for this extra work or for taking additional risk. On the flip side, though, the benefit of the asset being more 24 · Australian Securitisation Journal | Issue 12_2017
as we can. What I would say is that it is manageable – it’s just a question of being aware of what’s happening. The other point is that terming out isn’t simple. Unless you have a master trust, securitisations by their nature are clunky. You have to build scale before taking a structure to the public market. What I’m saying is that if we can do a A$600-700 million securitisation we won’t save much if anything if we push out a deal of A$500 million a month or two earlier. We would rather maintain a programme and be consistent with investor expectations, while appropriately pricing every element of our cost – including warehousing.
Davison Presumably warehouse cost doesn’t have much impact on asset growth, either. LAWLER Quite. We may want to term
out quicker but this doesn’t necessarily make it practical to do so.
homogenous is that it is likely to be more widely covered and traded, and therefore more liquid, due to its homogeneity.
Davison Is the originator’s name and reputation
important here? ◆ PRABHU
It is hard to say definitively, given the low issuance volume of credit-card receivables to date and the fact that, as a result, we haven’t traditionally covered this sector. Again, it would probably come down to the risk characteristics and any data we could source in relation to default history and performance of underlying collateral, and then price for the relative risk of this style of asset. ◆ BOURKE Track record and reputation certainly helps when looking at revolving structures where there are eligibility criteria. But investors also rely to some extent on the originator to continue underwriting to consistent standards. This is somewhat more like corporate lending, where management has a larger part in the success of a credit than a traditional closed-ended ABS structure. ◆ MIXTER When we issued our master-trust deal I think we were able to demonstrate a track record of managing a
the price tension that comes from Does it influence, or indeed of nonbank issuers, in time almost growth in the number of players. accelerate, public funding every warehouse facility will have at progress plans? least one, and possibly more than one, Davison The master trust should GRAY It’s just ‘one of those things’, external mezzanine investor involved. give issuers flexibility to respond really. If you look at the journey we There used to be a few like this, but I to things like sub-benchmarkhave been on, we are going down the think it will become the norm. sized reverse enquiries. Does scale of funding cost so a marginal LAWLER We have been through this Latitude Finance Australia increase in one of the steps is not before. When the financial crisis hit it intend to use its master trust that major a consideration. We have was unheard of to have a mezzanine in this way or to stick to factored it in, anyway. investor in a warehouse, but it became benchmark issuance? DIAMOND The mezzanine market is too capital-intensive for banks. We, VARRO Probably both. Flexibility is definitely becoming more competitive, along with other warehouse users, useful and we have the ability fairly and we are seeing the benefit of found investors to take care of the quickly to complete bilateral deals. But this. There is also interest in having double-B type tranche that used to the master trust makes programmatic us more closely align our warehouse be funded in some manner by banks. issuance much more efficient. structure with how it might look in I don’t see today’s situation as any the term market. This is interesting, different, notwithstanding we are now Davison How does the change in though it affects complexity and the talking about a different part of the warehouse cost affect a newer pace at which we could get something capital stack. The market will adapt. market entrant like zipMoney? ready for the term market. SAMSON I think the most pleasing aspect is the number of mezzanine investors that are willing “There is definitely more yield and spread on to participate. In years the asset side of consumer receivables. This gone by the market was beholden to a tiny number helps with the warehouse situation, certainly in of mezzanine lenders, comparison with prime mortgages.” whereas now I think SARAH SAMSON NATIONAL AUSTRALIA BANK issuers are benefiting from SAMSON My feeling is that, in the case
portfolio over an extended period to investors, and I certainly think this was very helpful. Because we could go back to the financial crisis and point to what we did during this period – in fact the person who managed this, our head of credit risk, was involved in marketing the new deal – we were able to explain to investors how we respond when we see challenges coming. It’s not just what we will do but what we actually did, and we can show the impact in the performance data. This was a very strong story to be able to tell investors. Having this type of track record is very important, though not so much when it comes to eligibility criteria for loans going into a master trust. There is really only so much we can do to the levers to change what goes into the portfolio. But the real selling point was being able to demonstrate that we can manage the portfolio when conditions aren’t optimal. ◆ VARRO Our behavioural – on book – scorecard was also a good selling point. It’s fine to be able to show that you have the right scorecard at origination but, as we showed throughout our pre-deal roadshow, we also conduct behavioural scoring every month to predict where there may be risks emerging in
the portfolio. Again, having our credit team on roadshow to discuss the things they look at and how they respond helps us tell our story.
Davison An anomaly of the Australian market is
that ABS traditionally prices wide of residential mortgage-backed securities (RMBS). Why is this – and could it change over time? ◆ PRABHU
It is hard to make an assessment without looking at default numbers and the different types of structures used here versus offshore. But I expect it reflects demand and supply dynamics, specifically the much lower amount of ABS issued in Australia. It is a hard one to explain, though, because one would expect investors to pay up for diversification. ◆ BOURKE There are valid reasons for both outcomes. The offshore ABS market is much deeper and more liquid, and thus easily tradeable, whereas in Australia it is a niche product with lower levels of liquidity than RMBS. Investors need to be paid for illiquidity, so ABS trades wider here. Overseas, ABS pricing reflects lower extension risk compared with RMBS. Mortgages have legal maturities of, 25
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say, 30 years whereas ABS generally has short legal maturity periods, of seven years, or high prepayments in the case of credit cards and store finance. Overall, I think it would require a significant change in issuance patterns to see the relativity change in Australia. There is just so much more RMBS issuance. ◆ KOE We track relative value between senior-unsecured bonds and the various structured asset classes, and it’s certainly true that ABS tends to get favourable pricing offshore – which I agree is largely due to its shorter maturity profile. An interesting thing we have seen over the past 18 months, though, is a tightening of the relative spread between ABS and RMBS in Australia. It is definitely a trend, and I think it is very positive to see a recognition of this trend in the investor base more broadly. I’m hopeful that the strong credit enhancement offered by ABS and its relative value will mean this trend persists. ◆ SAMSON I actually think relative pricing dynamics in Australia will change over time with further narrowing between ABS and RMBS, though maybe not to the extent that we see in places like the US where ABS is clearly the tightestpriced product. Having more issuers and extending the track record of ABS collateral performing as expected will help. Investors fundamentally like ABS because it offers diversity from the mortgage sector. Our market is so dominated by mortgages that we find a positive initial response from investors every time we are able to bring them an ABS transaction. ◆ KOE This story also applies offshore. Having recently roadshowed Australian ABS internationally, I can say that a lot of attention continues to be paid to the Australian housing market. ABS offers valued diversity in this context, including in higher-yielding mezzanine notes.
LOWER-RATED DEMAND Davison One of the features of the Australian
securitisation market across asset types in recent months has been the really strong bid all the way down the capital structure of deals. What is driving this? ◆ BOURKE
There is an element of looking for yield further down the structure, but it hasn’t driven us that far. It’s certainly true,
though, that senior notes often have a very competitive bid since new investors often start with the most senior notes. This makes us more inclined to look to where there is still value, being the junior triple-A tranches and sometimes down to single-A. ◆ KOE We are also seeing a significant uptick in international demand for Australian mezzanine paper. I think this will only grow as there is more liquidity and better understanding of Australian collateral. This is certainly a positive development. ◆ SAMSON I think the lower-rated bid is quite opportunistic, in the sense that investors with strong credit and analytical skills have taken advantage of the fact that banks as investors have, over time, found themselves increasingly restricted to triple-A. There has also been a huge shift in the format of warehousing in this respect. We are seeing more mezzanine and junior investment at the warehouse phase, which can flow into the term market. APS 120 is only increasing the need for mezzanine warehouse funding, but actually I think this will be beneficial for term deals.
Davison Could we start to see subordinated
notes effectively being pre-sold, in other words the third-party investors that funded this component of warehouses maintaining ownership when facilities are termed out? Investor scaling has been an issue, and this might allow real-money investors to secure allocations ahead of public deals. ◆ SAMSON
It’s possible, and I think ‘warehouse rights’ should ensure these tranches continue to be well bid. However, as a lead manager we would like to see at least some lower-rated notes being made available to the open market – it’s good for the market if they are, especially as not all investors can participate at the warehouse phase. I see it more as a great backstop for issuers, especially when market conditions are not as positive. We are conscious of the level of interest in this segment of the capital structure and will ensure market participants are aware of the quantum of notes that could be available if a transaction or note tranche is partially pre-placed. ◆ SCHLOSSER When it comes to terming out, issuers have to be careful from a tax perspective not to tie their hands too tightly if they want to do a ‘true’ public offer. The various
“PERFORMANCE HISTORY REALLY COMES DOWN TO HOW QUICKLY THE RECEIVABLES CYCLES ACCRUE. WITH CREDIT CARDS, THE REPAYMENT CYCLES ARE OBVIOUSLY MUCH QUICKER THAN RESIDENTIAL MORTGAGES SO OUR REQUIRED HISTORY MIGHT BE LESS THAN THE 2-4 YEAR MARK.” VIVEK PRABHU PERPETUAL INVESTMENTS
26 · Australian Securitisation Journal | Issue 12_2017
classes of notes have to “WE HAVE A TRADITIONAL APPROACH WHEN IT be genuinely offered COMES TO THINGS LIKE LENDING STANDARDS AND publicly. CREDIT VALIDATION. THE TECHNOLOGY ASPECT IS ◆ BOURKE We have MORE ABOUT WHAT WE BOLT ONTO THIS – THINGS looked at investing at the warehouse LIKE USING BIG DATA TO MAKE MORE INFORMED phase. A key issue is DECISIONS IN REAL TIME.” warehouse investments PETER GRAY ZIPMONEY are generally private, nontraded transactions. We often prefer to be a cornerstone investor in issuer has to weigh up its own preferences. It will depend on public deals – which allows similar advantages of securing the issuer’s profile and market conditions. good allocations in specific tranches. ◆ PRABHU I wouldn’t say we are keenly interested in or NEW ISSUERS chasing these assets though we have reviewed some of these warehousing transactions. They really are hold-to-maturity Davison How does a company like zipMoney, investments and, again, if we aren’t being paid for the risk or which has progressed from VC funding to more the illiquidity this naturally reduces our appetite for this type recently adding warehouse facilities, think about of asset. If they are structured appropriately and we are being the funding process – including when it makes compensated for the risks we would consider them. sense to debut as a public securitisation issuer? ◆ GRAY The main consideration is scale – we have to be at Regarding scaling on any kind of asset, whether it’s corporate bonds or securitisation, the way bookbuilds are a dollar size where public securitisation makes sense. It’s managed needs to be more transparent and lead managers certainly the goal at this stage to get there. ◆ DIAMOND Credit-fund investment was the initial key to our need to be more cognisant of rewarding investors who get in early. journey: Victory Park Capital (Victory Park) really got us off If you’re going to leave a book open for every last bid the ground in the first instance. We had a lot of history and to come in, and you have a case where there’s a large intellectual property in zipMoney from the start as it relates oversubscription and investors get heavily scaled, it isn’t a to the people in the business, but obviously there wasn’t great result for anyone. This certainly leaves a bad taste for an origination track record. Credit funds like Victory Park investors that have done the credit work and come in early. have emerged in recent years to support consumer-finance It would be a better outcome if bookrunners managed the businesses when it’s too early to have conversations with process well and considered closing the book early even if it is traditional warehouse funders. only slightly oversubscribed. This funding has been a huge enabler for us, but obviously I understand bookrunners are trying to do the best by the the sooner we can progress to more traditional funding – issuer in terms of getting the widest array of investors involved specifically warehousing with major banks – the better for us. in transactions, but they need to balance this with keeping From there, we hope to get a rating in the next 2-3 years and investors happy. Investors are understanding of a little bit of progress to term markets on the back of this. scaling. But when you get very small allocations that are quite The key for us is how the consumer-finance market meaningless at the portfolio level it can be frustrating. evolves, specifically how diverse it is and the extent to which ◆ SAMSON It’s definitely important for issuers to strike a it allows us to carve out a presence in pools such as health and balance between getting security of funding and not being furniture. ◆ SAMSON I think it’s fair to say that zipMoney is already reliant on a very tight group of investors. You have to put your deal out into the market to attract investor diversity, and each seeing good demand from mezzanine investors, which is a
“I BELIEVE WE WILL SEE MORE LENDERS PROGRESS TO THE WAREHOUSE-FUNDING STAGE AS GROWTH IN THE NUMBER OF ORIGINATORS CONTINUES – AND INDEED WE ARE SEEING WAREHOUSES BEING ESTABLISHED AT THE SMALLER END OF THE COMMITMENT SPECTRUM.” JENNIFER SCHLOSSER ASHURST
27
COPUBLISHED ROUNDTABLE
positive sign of where the company has already got to. It’s pleasing that these investors are willing to participate even in the absence of a 5-6 year track record. ◆ DIAMOND Absolutely. I’d also note that we have seen more interest specifically from Australia, which is very encouraging. ◆ SCHLOSSER A common path seems to be emerging for new fintech lenders in Australia. We have seen four or five examples of companies moving from equity to mezzanine funding, and then to senior funding. Programmes are set up on day one with an unfunded senior note alongside funded mezzanine notes. The next step is to fund the senior note, and we are seeing this happening for a number of companies right now.
Davison When it comes to debut public
transactions, what are investors looking for? In particular, how much track record does a new issuer have to have before investors can assess their assets? ◆ PRABHU
As a guide, for a well-understood asset class such as RMBS we know that, generally, if a loan is going to go bad it typically happens in the first 2-4 years. For RMBS we generally like to see this kind of length of performance history to get some comfort. When it comes to credit cards or other types of securitised receivables, performance history really comes down to how quickly the receivables cycles accrue. With credit cards, the repayment cycles are obviously much quicker than residential mortgages so our required history might be less than the 2-4 year mark. ◆ BOURKE As an investor I am looking for similar things to what rating agencies examine: five years of loss history is helpful, for instance. We can manage with less than this but it would require deeper comparable analysis – really drilling down into origination standards so we can compare with other lenders – and five years’ track record tends to be the benchmark. Other key considerations include relative value to structured deals, financials and credit-default swap spreads. Technicals – recent bookbuild statistics as well as the type of investors participating – contribute to volatility and liquidity. Arrangers’ willingness to provide firm markets is also a liquidity consideration. Macro conditions also affect appetite.
◆ LAWLER
Dylan Bourke is right that this is fairly similar to what rating agencies demand. They want to see a history over the full cycle of assets you are funding – at least four years of history and thus a full loss profile for four-year personal loans, for instance. ◆ SAMSON What this means is that, while there are a lot of new players in the consumer-finance sector, securitisation is not going to be for all of them. New entrants will typically require multiple relationships as their businesses grow. They need partners to back them through the initial developmental and ramp-up phases. Banks will typically enter at an intermediate point, providing a line of credit to enable a business to access funding while it accumulates sufficient history and volume to enter term capital markets. It is at least a five-year horizon to public markets. It pays off, though, because securitisation is such a scalable and cost-effective funding tool.
Davison This must be very challenging for new
entrants, because they are restricted to what is presumably relatively costly funding at exactly the point in the life of their business at which they are also having to establish a brand and grow market share. How aggressive does the timeline of getting to the next step down in funding cost have to be? ◆ DIAMOND
We have been on a journey from blank canvas, and there have certainly been key aspects – on both the equity and debt side – that we have already had to solve. Making sure we have the right funder for each stage of the business and giving ourselves a quick time frame to get to the next hurdle is important, but so is making sure we are only having conversations with the next tier of funders at the appropriate time. For instance, when we started with a A$100 million warehouse line from Victory Park it was important to wait until we had built and established a track record with this credit before approaching bank lenders. ◆ GRAY We have also partnered with similarly aligned players, in a way that eases the emphasis on price of debt. Victory Park offered flexibility and support as we built the business, and going forward we want to achieve the same sort of alignment in our current and future funding relationships. ■
“IN THIS SECTOR, OPPORTUNITY GOES BACK TO CUSTOMER EXPERIENCE TO A SIGNIFICANT EXTENT. IT’S ALL VERY WELL HAVING GREAT UNDERWRITING ABILITY BUT IT’S VITAL TO ALIGN IT WITH A SUPERIOR, FRICTIONLESS CUSTOMER EXPERIENCE.” PAUL VARRO LATUTUDE FINANCE AUSTRALIA
28 · Australian Securitisation Journal | Issue 12_2017
COPUBLISHED
RICHARD KLEMMER CHIEF EXECUTIVE PEPPER UK TODD LAWLER GROUP TREASURER PEPPER GROUP
Q+A
PEPPER UK: GLOBAL EXPERTISE, LOCAL BENEFITS Pepper Group (Pepper) acquired its UK business in 2013 and, having firmly established itself as a lender and servicer, is now readying its residential mortgagebacked securities (RMBS) sterling debut. Richard Klemmer, London-based chief executive at Pepper UK, and Todd Lawler, group treasurer at Pepper in Sydney, share perspectives on growth ambitions and funding plans for Pepper UK. To start, tell us about the development of the UK business – how has it grown, what stage is it at now and what are the growth targets? ◆ KLEMMER The UK business has grown on several different fronts since Pepper acquired it in 2013. In particular – and in this case bearing more similarity to Pepper’s European businesses than its Australian one – the UK arm has a very large third-party loan-servicing operation which is currently managing £11 billion (US$14.2 billion) of mortgages for institutional clients. This is a substantial segment of the UK business and one which has grown significantly – from around £3-4 billion – since the acquisition. Our forecasts expect this extremely positive and robust growth to carry on as our assets under management continue to build over the next 3-4 years. This is a very good backdrop for our expansion into lending, which we started about a year and a half ago. We are now offering near-prime and nonconforming first-charge residential mortgages and buy-to-let mortgages
in England and Wales, using a welldeveloped broker distribution channel similar to that deployed by Pepper’s Australian business. To give some colour on the brokerdistribution channel in the UK, this is predominantly made up of independent, directly authorised brokers approved by the Financial Conduct Authority. There are also ‘mortgage clubs’, which act as aggregators of smaller independent brokers but which by themselves aren’t large enough to gain access to most lenders. And there are mortgage networks that fulfil a similar role to the clubs, as aggregators. But instead of bringing directly authorised brokers together they appoint their own approved representatives and provide bespoke products from the lenders on their panels to their representatives. To give some context into how well established the broker channel is in the UK, third-party intermediated mortgages total about 75 per cent of mortgage origination. A year and a half into our Pepper UK lending business we continue to grow our presence and establish our position
within the various distribution channels and expand our reach into broker channels. In Australia, Pepper’s core business is in nonconforming mortgages but it also has significant complementary presence in prime mortgages, auto finance and consumer loans. How does the UK book compare – and what is the reason behind any differences? ◆ KLEMMER We started out in the UK with a product line focused on specialist and nonconforming mortgages, using the same approach Pepper took in Australia many years ago. We view this as the product and market with which we are most familiar and therefore believed it was the right place for us to start to develop our UK brand, distribution channels, infrastructure and operating platform. We will follow Australia’s lead on product expansion into both broader mortgage and consumer-finance products. With the benefit of now having developed IT across the group within our other products, this could accelerate
“We hope to have sufficient capacity to regularly issue transactions in Australian dollars, US dollars, sterling and euros, as well as the ability to meet specific pockets of demand. Having a global issuance programme is the bedrock of the funding strategy.” RICHARD KLEMMER
29
COPUBLISHED
Q+A
our ability to diversify products in the UK compared with the pace of our evolution in Australia. As we sit here today we are focused on nonconforming mortgages. As we establish the lending platform over the next 2-5 years we expect to start to expand the product offering and the geographic range in which we offer these products. The UK mortgage market’s regional disparities would be familiar to Australians. What is Pepper’s regional strategy in the UK? ◆ KLEMMER The regional strategy from the outset was to focus on England and Wales and not move into more remote jurisdictions in Scotland and Northern Ireland until we had the opportunity to really bed down our lending operations. Having said this, we have extensive experience from our servicing
How is this affecting Pepper’s UK business and strategic outlook? ◆ KLEMMER To date, Brexit hasn’t had a noticeable impact on the Pepper business. What we’ve observed generally across the UK is moderating price appreciation in the central London real-estate market – and in some cases prices coming off a little. This doesn’t directly affect Pepper as our typical nonconforming customer is not in this region. So even though we have seen prices easing in some of our thirdparty servicing books this activity has had minimal impact on our lending activities. This is not to say we don’t spend a great deal of time focusing on the potential impacts of Brexit on the business. From what we’ve found, we believe the greatest potential implications are likely to be related to the macro environment.
resilience since the vote nearly a year ago. But frankly, the UK is just getting started with Brexit. How is offshore event risk affecting Pepper’s Australian strategy, particularly on the funding side, and what feedback are you receiving from institutional investors? ◆ LAWLER In the context of overall funding, we are predominantly concerned about what’s driving investor appetite in all jurisdictions globally, including Europe. Clearly there has been a lot of regulatory change in Europe that has forced a change in regional investor behaviour. We are watching carefully to see if this causes a flight to particular asset classes or currencies. Within our bond programmes we have so far issued in Australian and US dollars and we are consistently monitoring other currencies. We market
“From a global perspective, we would like to achieve as much diversity as we can. It is not just securitisation, whole-loan sales or deposits that are important – but providing structured products to meet a wide range of investors’ requirements.” TODD LAWLER
operations – we have been servicing loans for 10 years across the entire UK market with around 75,000 mortgage customers. This means we have widespread knowledge of regional differences across the UK – and even differences within regions – with respect to house-price performance. We factor all this into our lending criteria and product design. We take a significant amount of advice from experts in our loan-servicing area as we design products and stipulate underwriting requirements. In the absence of these kinds of specialities we’d be somewhat less sophisticated than we are. Of course any UK-focused interview at the moment has to cover Brexit. 30 · Australian Securitisation Journal | Issue 12_2017
Like most lenders of UK consumerbased products, we are long UK consumers. We service mortgages for several thousand customers and we are making new loans to mortgage customers all the time. So we are watching general macroeconomic developments very carefully. If we start to see a genuine economic slowdown as a consequence of the deal that does – or doesn’t – happen through the Brexit process, this may bring about challenges insofar as the general management of back books. As for any lender, growing unemployment in a weakening economic environment makes it more challenging to lend. These types of macro themes are possible, but we have not seen them yet. The UK has maintained very strong
to investors in all jurisdictions as a matter of course. ◆ KLEMMER From a UK vantage point, we have recently begun devoting a reasonable amount of time to meeting investors because we are beginning to prepare for our first capital-markets transaction – which we expect to emerge later in 2017. This said, many of our institutional clients securitise their loan products and as the main servicer on these deals we have good oversight into how the term-funding market is functioning at any given time. At the moment, this part of the market – as well as appetite for sterling-denominated paper – is holding up remarkably well, even with the prospect of exogenous events such as Brexit.
In fact, execution in sterling paper, in particular when it comes to primary issuance, is extremely good. Over the last four or five months there has been a steady flow of UK mortgage-backed transactions which have achieved very solid outcomes both from a syndication and pricing perspective. Whether this could change over the coming months is unclear, but so far investors have been sanguine. ◆ LAWLER We have been telegraphing the fact that our UK business will be coming to market in the future during Pepper Australia’s recent roadshows – and there is a great deal of interest in a potential transaction. I am very confident we will get good investor support as a result. We have a range of investors that like our credit and I get the sense that being able to offer these investors greater diversification within our asset pool will be very well received. Staying with the funding theme, how does the UK operation fund itself currently and can you tell us a little more about plans for your first public UK securitisation? ◆ KLEMMER Our current funding structure is the traditional nonbank model that we have used for many years in Australia and other jurisdictions. This is a warehouse facility into which we originate loans and build them to a suitable size to be able to refinance or to exit. Like all Pepper businesses, in the UK we would like to build as much diversification in our funding platform as possible. We are therefore closely monitoring the RMBS market with a view to debuting in sterling out of the Pepper Residential Securities programme. We don’t have a specific date in mind, although we are hopeful that an opportunity will arise later this year. We are also very active in talking to and working with UK-based challenger banks that have appetite for whole loans on a committed-flow basis. We have solid relationships with these
banks through our servicing operations, and therefore the prospect of having a committed whole-loan flow sale programme running alongside the capital-markets programme is a very appealing way to add funding diversity. ◆ LAWLER From a global perspective, we would like to achieve as much diversity as we can. It is not just securitisation, whole-loan sales or deposits that are important but providing structured products to meet a wide range of investors’ requirements. Issuing public securitisations remains our staple. But in order to gain access to complementary funding we also actively engage in privately placed transactions that are designed on a bespoke basis to meet specific investors’ needs. We have already been executing whole-loan sales on a global basis for some time and we have used deposit funding in our South Korea business. This gives us the full range of funding across the group and we continue to explore ways to ensure we have as much diversification as possible. In Australia, Pepper issues term funding a couple of times a year. Is the aim for the UK business to reach similar issuance frequency? ◆ KLEMMER Yes. We think issuers that are programmatic in nature and that routinely access markets with new primary deals are received favourably by investors, and as an issuer we like to be in front of investors throughout the course of every year. As a broader group, we now have the benefit of being able to turn the programmatic issuance that Pepper Australia has built over time into a global programme, where we routinely take deals to capital-markets investors both from a broad primary-issuance standpoint and in a more tailored format. Looking forward, we hope to have sufficient capacity regularly to issue transactions in Australian dollars, US dollars, sterling and euros, as well as the ability to meet broad-based and specific
pockets of demand. We think having a global issuance programme is the bedrock of the funding strategy we are putting in place across the group. We understand that the UK banking regime may have made it more appealing for nonbank lenders to seek banking licences. What is Pepper’s thinking on becoming a UK deposit taker and how might being a bank affect Pepper’s funding? ◆ KLEMMER As Todd and I have both mentioned, we are working hard to establish, develop and maintain as much diversification as possible across our funding platforms – and this also holds true for banking. We already have a bank within the Pepper Group, in Seoul, and we are paying very close attention to developments in the UK. It is our sense that, with respect to its willingness to consider new entrants coming into the banking sector, the UK arguably currently has the most user-friendly regulator. This means seeking a UK banking licence is something we are investigating, alongside more traditional funding options. It is a big step, though, and it takes us into an entirely new space. The pros are obvious: taking retail deposits would provide a genuine diversification opportunity away from our reliance on third-party funding. When capital markets aren’t at their most efficient, this alternative would also provide us access to stable and sticky retail deposits. However, it also entails an entirely different level of regulation that is not to be dismissed, including the notinsignificant capital requirements for banks under Basel rules. In addition, during times when capital markets are at their most efficient, retail deposits do not provide the cheapest option. There are pros and cons and we are weighing these up across the group. As a lending business, access to retail deposits is a thought-provoking option. We continue to investigate this in any jurisdiction where it might be feasible and where the economics make sense. ■ 31
COPUBLISHED
Q+A
SCOTT MCWILLIAM JOINT CHIEF EXECUTIVE RESIMAC MARY PLOUGHMAN JOINT CHIEF EXECUTIVE RESIMAC
NEWLY MERGED RESIMAC TARGETS SUSTAINABLE GROWTH In late 2016, Resimac underwent a significant organisational transformation when it merged with the listed mortgage specialist, Homeloans. The combined entity now lays claim to the most prominent nonbank footprint in Australia’s mortgage distribution space with a portfolio exceeding A$13 billion (US$9.7 billion) and a funding platform of A$6 billion. Mary Ploughman and Scott McWilliam, Resimac’s Sydney-based joint chief executives, discuss the company’s current positioning and future strategy.
W
hat was the rationale for the Homeloans merger? ◆ PLOUGHMAN Resimac has been quite successful in developing its front-end distribution business into diversified channels such as online, the broker-aggregation market and direct to customer. However, it still lacked a genuine retail presence. Homeloans, on the other hand, had built a very successful brand largely based on the mortgage-manager model with longstanding funding support and investment from National Australia Bank and Macquarie Bank. The respective strengths of the two organisations were definitely complementary, so the merger made a lot of sense and was overwhelmingly supported by both groups’ boards and shareholders. The combined business now has a true vertically integrated model through the combination of a highly regarded funding platform and a fully diversified retail mortgagedistribution programme. How has Resimac’s market share and book growth changed since the merger? ◆ PLOUGHMAN The growth in our market share is particularly noteworthy given the benign economic conditions and the strong housing market that
32 · Australian Securitisation Journal | Issue 12_2017
largely determine the overall size of the space. We are now one of the largest originators in the nonbank sector. Pleasingly, the growth in new business has been achieved without having to sacrifice credit quality or price. We’re principally in the business to grow organically but, where market conditions allow, we have no issues in augmenting growth with acquisitions aligned with enterprise strategy. ◆ MCWILLIAM We have had some success in pursuing acquisitions by regulating our M&A activities in line with our risk appetite and funding capabilities. We have closed in excess of A$2 billion in asset and company acquisitions over the last three years in the domestic, New Zealand and UK markets with all integrated into our servicing and funding platforms in a very timely manner. Investors have responded very favourably as we’ve expanded our issuance programmes and therefore given them more to look at. Last year we were able to securitise acquired assets in Australia, New Zealand and the UK. How have the structural changes the mortgage market has experienced in recent times been reflected in Resimac’s funding programme? ◆ MCWILLIAM We made a significant decision some time ago that we needed to diversify our funding base, starting with our short-term warehouse lines. Over the last five years, we have
expanded the markets in which we issue and now have a successful US 144A programme that makes a material contribution to our funding task. We’ve always ensured that we maintain excess capacity in both our asset and liability platforms in order that we can take advantage of opportunities and accommodate growth in the business. Our investment in our offshore funding programme underpins a lot of our enterprise decisions, such as our ability to meet calls and our risk appetite. We were able to raise A$1 billion in our recent Premier 2017-1 trade – we see this as clear recognition of our residential mortgage-backed securities (RMBS) programme. How does the organisation align its enterprise objectives with those of RMBS investors? ◆ PLOUGHMAN First up, the performance of asset collateral is outstanding. Australian mortgages have outperformed their issuance peers for many years now. To me, it is one of the safest forms of collateral and, therefore, a low-risk investment. The attractiveness of the Australian product is augmented by its yield profile, particularly in the triple-A space. This doesn’t mean investors won’t be cautious but even this will play to our strengths as I believe we understand investor needs better than our competitors.
We maintain a regular profile in issuance markets. The frequency of our capital-markets issuance enables an awareness of perceived risks that allows us to respond in the manner in which the organisation is managed. ◆ MCWILLIAM We are a consistent issuer with capital structures tailored to investor preferences. Our mortgage collateral outperforms peers, we have an exceptional record of meeting call options and we have undertaken measures to maintain ratings where criteria have changed. We work closely with the buy side to understand sensitivities and needs, and have therefore been able to build a strong foundation of realmoney investors. Our investor base encompasses global asset managers to
times, so the structure of our short-end funding reflects this with excess capacity available at all times. We want to be in the market on a very regular basis and we can demonstrate that we have been able to issue in varying conditions. We have closed 22 public RMBS deals since the onset of the financial crisis and have undertaken a number of successful capital-raising trades in line with our balance-sheet growth. How has asset performance been over the last five years? ◆ PLOUGHMAN We have seen our book’s performance improve significantly, to reflect tighter underwriting standards introduced during the early days of the crisis.
How has Resimac’s investment in technology and systems benefited its growth aspirations? ◆ PLOUGHMAN Our proprietary asset-management platform is a core attribute of Resimac. We have continued to make significant capital investment in the platform to ensure it meets the requirements of the asset and liability sides of the organisation. The primary objective with our systems is for them to be as flexible and scaleable as possible, to support growth aligned to strategy while offering efficiency and productivity outcomes and comprehensive managementinformation-system reporting. ◆ MCWILLIAM Owning our own platform has enabled us to respond to opportunities in the market and
“Our ambition is to double our market share. In order to do this we will focus on our core prime and nonconforming businesses. We continue to believe the nonconforming market has a very bright future for us and will provide incremental returns to the prime business.” MARY PLOUGHMAN
boutique credit funds and family offices. For instance, this diversity was reflected in the Premier 2016-1 trade – which saw 20 real-money accounts participating. ◆ PLOUGHMAN A primary objective of our investor-relations activities is not only to attract new investors but to foster our relationships with them, so they are comfortable with our name and are longterm partners. We come at our business from the perspective of the investor being the ultimate client that we wish to service, in conjunction with the mumand-dad borrowers at the front end. How does Resimac determine the frequency with which it goes to the public securitisation market? ◆ PLOUGHMAN It’s part of our overall funding strategy that covers production volume and refinancing called collateral. We are aware that credit markets can be dysfunctional at
There has also been significant consolidation in distribution channels aided by a national regulatory and licensing regime that has resulted in a higher standard of mortgage industry participants. We have also created a stronger model by vertically integrating our origination sources, giving Resimac greater control and enhanced asset quality. Resimac now has a strategic shareholding in an aggregation platform – with more than A$20 billion in loans – and an online channel, both of which have translated into a betterperforming, more diversified book. ◆ MCWILLIAM It’s also given Resimac greater control over its revenue as we no longer have to pay remuneration to third parties. Our ability to leverage off our technology capabilities has been a real enabler of establishing and building these proprietary channels.
to develop products with an element of control and governance we would not have if we were using third-party providers. How do you see the organisation positioning itself over the next five years, especially when it comes to growth ambitions? ◆ PLOUGHMAN Our ambition is to double our market share. In order to do this we will focus on our core prime and nonconforming businesses. We continue to believe the nonconforming market has a very bright future for us and will provide incremental returns to the prime business. We will look at diversifying our asset classes, on both a selective and opportunistic basis. The directional thrust of the business will always be around converting financial receivables into bonds. ■ 33
ISSUER PROFILES
ANZ BANKING GROUP
AMP BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
YES
AUSTRALIAN ADI
PROGRESS
SECURITISATION PROGRAMME NAME
USE O F SE CU RI T IS A T IO N
AUSTRALIAN FINANCE GROUP YES
AUSTRALIAN ADI
NO
KINGFISHER
SECURITISATION PROGRAMME NAME
AFG
U S E O F SECURITISATION
TYPE OF SECURITISATION ISSUED
PRIME RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
TYPE OF SECURITISATION ISSUED
17%
PROPORTION OF OUTSTANDING 2% WHOLESALE FUNDING SOURCED VIA SECURITISATION
NUMBER OF SECURITISATIONS ISSUED
19
NUMBER OF SECURITISATIONS ISSUED
5
TOTAL VOLUME ISSUED
A$17BN
TOTAL VOLUME ISSUED*
A$6.5BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
74% DOMESTIC 26% OFFSHORE
TOTAL DOMESTIC VS OFFSHORE ISSUANCE*
48% DOMESTIC 52% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$3.1BN
OUTSTANDING VOLUME OF SECURITISED ISSUES*
A$1.8BN**
F
ormed in 1849, AMP Group is Australia and New Zealand’s leading independent wealthmanagement company, with an expanding international investmentmanagement business and a growing retail-banking business in Australia. Specifically, AMP Bank is an Australian retail bank offering residential mortgages, deposits, transaction banking and self-managed superannuation-fund products, with around 100,000 customers. It also has a small portfolio of practice-finance loans. AMP Bank distributes through brokers, AMP advisers and directly to retail customers via phone and internet banking.
◆ please contact:
Gwenneth O’Shea Head of Securitisation +61 2 9257 5823 gwenneth_oshea@amp.com.au www.amp.com.au/securitisation 34 · Australian Securitisation Journal | Issue 12_2017
INTERNAL (FOR RBA REPO PURPOSES) AND EXTERNAL
* Excluding internal securitisations. Reported values are based on initial amounts securitised at the time of each securitisation. ** As at 28 February 2017.
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 Asia-Pacific 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.giffford@anz.com Mostyn Kau Head of Group Funding +61 3 8655 3860 mostyn.kau@anz.com John Needham Head of Structured Funding +61 2 80370670 john.needham@anz.com www.anz.com
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED
PRIME RMBS
PROPORTION OF OUTSTANDING 50% WHOLESALE FUNDING SOURCED VIA SECURITISATION NUMBER OF SECURITISATIONS ISSUED
4
TOTAL VOLUME ISSUED
A$1.2BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$555M
A
ustralian Finance Group (AFG) is one of Australia’s leading companies when it comes to financial solutions. Founded in 1994, AFG has grown to become one of the largest mortgage-broking groups in Australia with a loan book of more than A$120 billion. Listed on the Australian Securities Exchange in 2015, AFG has in excess of 2,800 brokers across Australia distributing more than 1,450 mortgage products supplied by AFG’s panel of more than 45 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 home loans are funded by multiple warehouses and term transactions. ◆ please contact:
David Bailey Interim CEO +61 8 9420 7837 david.bailey@afgonline.com.au Ben Jenkins Chief Financial Officer +61 8 9420 7035 www.afgonline.com.au
AUSWIDE BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
YES WB
US E O F SE CU RI T I SA T IO N TYPE OF SECURITISATION ISSUED
PRIME RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
67%
NUMBER OF SECURITISATIONS ISSUED TOTAL VOLUME ISSUED
BANK OF QUEENSLAND BLUESTONE GROUP AUSTRALIAN ADI
YES
AUSTRALIAN ADI
NO
SECURITISATION PROGRAMME NAMES
REDS (RMBS), REDS EHP (ABS), IMPALA (ABS)
SECURITISATION PROGRAMME NAMES
SAPPHIRE, EMERALD
U S E O F S ECURITISATION
USE OF SECURITISATION TYPES OF SECURITISATION ISSUED
RMBS, REVERSE MORTGAGE
PROPORTION OF OUTSTANDING 8% FUNDING SOURCED VIA SECURITISATION
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
67%
12
NUMBER OF SECURITISATIONS ISSUED
39
NUMBER OF SECURITISATIONS ISSUED
22
TYPES OF SECURITISATION ISSUED
RMBS, ABS
A$3.4BN
TOTAL VOLUME ISSUED
A$23.4BN
TOTAL VOLUME ISSUED
A$6.5BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
92% DOMESTIC 8% OFFSHORE
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
92% DOMESTIC 8% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$320M
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$3.9BN
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$713M
A
uswide Bank became Australia’s 10th, and Queensland’s third, Australian-owned bank, listed and trading on the Australian Securities Exchange, on 1 April 2015. However, the company has operated as a building society since 1966. Auswide Bank has Australian credit and financial-services licences issued by the Australian Securities and Investments Commission, and is an authorised deposit-taking institution supervised by the Australian Prudential Regulation Authority. Auswide Bank offers Australians an extensive range of personal and business-banking products and services issued directly or in partnership with leading service providers via branches, strategic relationships and online and digital channels.
◆ please contact:
Dale Hancock Group Treasurer +61 7 4150 4025 dhancock@auswidebank.com.au www.auswidebank.com.au
* All figures as at 28 February 2017.
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 the Australian Prudential Regulation Authority as an authorised deposittaking institution. The bank had total assets under management of A$51 billion as at 28 February 2017.
◆ please contact:
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
B
luestone Group (Bluestone) is a dynamic financial-services business with more than 270 employees and operations in Asia Pacific, the UK and Europe. The business is backed by Macquarie Bank and LDC, the UK’s largest mid-market privateequity house. In 2000, Bluestone began originating mortgages in the Australian market. After a hiatus, the company recommenced mortgage origination in 2013 and has issued four Australian RMBS transactions since this time. With vast experience in the nonconforming mortgage space, Bluestone has cemented its place in the sector, ranking numberone specialist lender in the Momentum Intelligence 2017 third-party lending report. Bluestone will continue its issuance of term RMBS. Bluestone engaged with investors around a potential new deal in May 2017. ◆ please contact:
Campbell Smyth Chief Executive, Asia Pacific +61 2 8115 5167 campbell.smyth@bluestone.com.au www.bluestone.com.au 35
ISSUER PROFILES
COLUMBUS CAPITAL AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
NO
AUSTRALIAN ADI
TRITON
SECURITISATION PROGRAMME NAME
USE O F SE CU RI T IS A T IO N TYPE OF SECURITISATION ISSUED
COMMONWEALTH BANK CREDIT UNION OF AUSTRALIA AUSTRALIA
PRIME RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
41%
NUMBER OF SECURITISATIONS ISSUED
7
TOTAL VOLUME ISSUED
A$2.1BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$779M
C
olumbus Capital was established in 2006 as a nonbank wholesale funder. In 2012, it acquired Origin Mortgage Management Services, its third-party wholesale lending business, from ANZ Banking Group. Columbus Capital has Australian credit and financial-services licences issued by the Australian Securities and Investments Commission. The company offers an extensive range of white-label home-loan products via strategic relationships and also via its online channel focused solely in the prime mortgage space. Columbus Capital also offers third-party servicing capabilities covering home loans, consumer-finance, lease and commercial ABS products.
YES
AUSTRALIAN ADI
YES
MEDALLION
SECURITISATION PROGRAMME NAME
HARVEY
U S E O F SECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
5%
NUMBER OF SECURITISATIONS ISSUED
23
TOTAL VOLUME ISSUED
A$58BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$12.5BN
C
ommonwealth Bank of Australia is Australia’s leading provider of integrated financial services including retail, premium, business and institutional banking, 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 in terms of transaction timing. Wholesale funding is complemented by securitisation issues through the Medallion programme.
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING 48% WHOLESALE FUNDING SOURCED VIA SECURITISATION NUMBER OF SECURITISATIONS ISSUED
11
TOTAL VOLUME ISSUED
A$6.8BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$1.7BN
C
redit Union Australia (CUA) has a long and proud history of providing banking and financial services to Australians. CUA is Australia’s largest customer-owned financial institution with nationwide representation through branches in Queensland, New South Wales, Victoria and Western Australia. CUA is an authorised deposittaking institution and is regulated by the Australian Prudential Regulation Authority.
◆ please contact:
◆ please contact:
Karl Sick Treasurer +61 9273 8132 karl.sick@colcap.com.au www.colcap.com.au 36 · Australian Securitisation Journal | Issue 12_2017
Simon Maidment Deputy Group Treasurer +61 2 9118 1339 simon.maidment@cba.com.au Ed Freilikh Executive Manager, Group Funding +61 2 9118 1337 edward.freilikh@cba.com.au www.commbank.com.au/ groupfunding
◆ please contact:
Len Stone Treasurer +61 7 3552 4662 leonard.stone@cua.com.au www.cua.com.au
FIRSTMAC
FLEXI CARDS
FLEXIGROUP
AUSTRALIAN ADI
NO
AUSTRALIAN ADI
NO
AUSTRALIAN ADI
NO
SECURITISATION PROGRAMME NAME
FIRSTMAC MORTGAGE FUNDING
SECURITISATION PROGRAMME NAME
Q-CARD, RFS TRUST 2006-1
SECURITISATION PROGRAMME NAME
FLEXI ABS
USE O F SE CU RI T I SA T IO N TYPE OF SECURITISATION ISSUED PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
U S E O F S ECURITISATION
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED
ABS
RMBS
TYPE OF SECURITISATION ISSUED
ABS
40%
90%
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
>80%
NUMBER OF SECURITISATIONS ISSUED
10
TOTAL VOLUME ISSUED
A$2.2BN
2
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
>80% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$435M
NUMBER OF SECURITISATIONS ISSUED
36
NUMBER OF SECURITISATIONS ISSUED
TOTAL VOLUME ISSUED
A$19.4BN
TOTAL VOLUME ISSUED
NZ$500M
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
90% DOMESTIC 10% OFFSHORE
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
80% DOMESTIC (NZ) 20% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$7.2BN
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$500M
F
irstmac is a leading online mortgage originator and one of Australia’s largest nonbank prime mortgage lenders. It originates and services prime residential mortgages in Australia. Firstmac has a long history of innovation in the mortgage industry. It originates only prime loans and uses its best-in-class credit practices and riskmanagement framework to ensure the quality of its portfolio. Less than 0.5 per cent of its portfolio is more than 30 days in arrears and 85 per cent of its loans have LVRs of less than 80 per cent as at 31 March 2017. Firstmac has been a regular issuer of RMBS in the Australian domestic and offshore markets since 2003. ◆ 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
F
lexi Cards (previously Fisher & Paykel Finance Group) has provided financial products and services to New Zealanders for more than 40 years. The company funds a large portion of its credit-card receivables through two constantly revolving structures: Q Card Trust and RFS Trust 2006-1. Q Card Trust (2014) combines aspects from US and UK master-trust deals with those from New Zealand-style ABCP programmes to permit ongoing issuance of term notes backed by revolving assets. Q Card Trust is designed to continually purchase receivables. RFS Trust 2006-1 is also a revolving structure, issuing ABCP to fund its Farmers Finance Card credit-card receivables. Flexi Cards is a subsidiary of FlexiGroup (see this page). ◆ please contact:
Paul Jamieson Head of Treasury +64 9 525 8593 paul.jamieson@flexicards.co.nz www.flexicards.co.nz
All data as at March 2017.
A
n Australian Securities Exchange 200-listed Australian public company, FlexiGroup is a diversified financial-services group providing point-of-sale interestfree, no-interest-ever, leasing and vendor programmes to consumers and businesses. FlexiGroup operates in Australia, New Zealand and Ireland. FlexiGroup operates under a number of brands including Flexirent, FlexiCommercial, Certegy, Once, Lombard and Q Card. FlexiGroup has been an annual issuer from its Certegy and FlexiCommercial brands since 2010. The 2016 transaction included a A$50 million Class A2-G note that was the first certified green bond of its type in the Australian market. This green tranche, backed by solar photovoltaic receivables, was climate-bond certified by the Climate Bonds Initiative. FlexiGroup’s 2017 ABS also included a green tranche. ◆ please contact:
June McFadyen Group Treasurer +61 2 8905 2059 june.mcfadyen@flexigroup.com.au www.flexigroup.com.au 37
ISSUER PROFILES
HERITAGE BANK AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
IMB BANK
YES
AUSTRALIAN ADI
HBS
SECURITISATION PROGRAMME NAME
US E O F SE CU RI T IS A T IO N TYPE OF SECURITISATION ISSUED
PRIME RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
APPROX. 41%
NUMBER OF SECURITISATIONS ISSUED
11 PUBLIC DEALS, 3 AUD WAREHOUSE ARRANGEMENTS, 1 AUD INTERNAL SECURITISATION ARRANGEMENT, 1 AUD PRIVATE DEAL
TOTAL VOLUME ISSUED
APPROX. A$6.1BN EQUIV.
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
APPROX. 59% DOMESTIC*, 41% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
APPROX. A$400M EQUIV.
* By original issuance. Only domestic issues remain.
H
eritage Bank (Heritage) is Australia’s largest mutual bank, with approximately A$8.8 billion in total consolidated assets as at 31 December 2016. It is a public company, limited by shares and guarantee, which operates as a mutual organisation. The mutual business structure is an integral component of Heritage’s operating philosophy. Heritage is an authorised deposittaking institution, regulated by the Australian Prudential Regulation Authority. ◆ please contact:
Rob Staskiewicz Structured Finance and Capital Manager staskiewicz.r@heritage.com.au Stuart Murray Term Debt and Liquidity Manager murray.s@heritage.com.au Heritage Treasury +61 7 4694 9500 www.heritage.com.au 38 · Australian Securitisation Journal | Issue 12_2017
ING BANK (AUSTRALIA) YES
AUSTRALIAN ADI
YES
ILLAWARRA
SECURITISATION PROGRAMME NAME
IDOL
U S E O F SECURITISATION TYPES OF SECURITISATION ISSUED
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING 45% WHOLESALE FUNDING SOURCED VIA SECURITISATION
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
26%
NUMBER OF SECURITISATIONS ISSUED
6 RMBS, 3 CMBS
NUMBER OF SECURITISATIONS ISSUED
10
TOTAL VOLUME ISSUED
A$3.3BN
TOTAL VOLUME ISSUED
A$9.1BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
98% DOMESTIC 2% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$515M
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$3.2BN
RMBS/CMBS (SMALL TICKET)
E
stablished in 1880, IMB has been helping people achieve their financial goals for 137 years. IMB offers a full range of banking solutions including home and personal lending, savings and transaction accounts, term deposits, business banking, financial planning and a wide range of insurance and travel products. IMB is regulated by the Australian Prudential Regulation Authority and the Australian Securities and Investment Commission. It is a member of the Customer-Owned Banking Association – an independent organisation representing mutual banks, building societies and credit unions. IMB has more than 190,000 members and total assets in excess of A$5.4 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
I
NG DIRECT – the trading name of ING Bank (Australia) – is a branchless retail bank. It is part of the world’s leading direct-savings bank and is wholly owned by ING Group. It offers products in retail mortgages, transactional banking, retail savings, specialised commercial-property markets and retail superannuation. With more than A$36 billion in retail deposits, A$41 billion in mortgages and 1.7 million customers, ING DIRECT is one of the largest home lenders in Australia.
◆ please contact:
Peter Casey Deputy Treasurer +61 2 9018 5132 peter.casey@ingbank.com.au Antony McNaughton Treasury Manager +61 2 9028 4137 antony.mcnaughton@ingbank.com.au www.ingdirect.com.au
LATITUDE FINANCIAL LA TROBE FINANCIAL SERVICES AUSTRALIAN ADI
NO
SECURITISATION PROGRAMME NAME
LATITUDE AUSTRALIA CREDIT CARD MASTER TRUST
USE O F SE CU RI T I SA T IO N TYPE OF SECURITISATION ISSUED
ABS
NUMBER OF SECURITISATIONS ISSUED
1
TOTAL VOLUME ISSUED
A$1BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$1BN
L
atitude Financial Services (Latitude) is a leading consumer-finance business in Australia and New Zealand, offering 2.6 million customers a broad range of financial products including personal loans, credit cards, insurance, and interestfree promotional and retail offers. The business employs more than 1,800 staff across Australia and New Zealand and services its customers through a network of retailer partners, brokers, and via telephone and internet. Latitude offers a full suite of financing solutions for retail partners, managing credit applications, credit authorisation, billing, remittance and customer-service processing. Its products include Gem Visa, GO MasterCard and 28 Degrees Platinum MasterCard.
◆ please contact:
Paul Varro Treasurer +61 3 9921 6514 paul.varro@latitudefinancial.com Steven Mixter Head of Funding +61 3 9921 6176 steven.mixter@latitudefinancial.com www.latitudefinancial.com.au
LIBERTY FINANCIAL
AUSTRALIAN ADI
NO
AUSTRALIAN ADI
NO
SECURITISATION PROGRAMME NAME
LA TROBE FINANCIAL CAPITAL MARKETS
SECURITISATION PROGRAMME NAME
LIBERTY
U S E O F S ECURITISATION
USE OF SECURITISATION
TYPE OF SECURITISATION ISSUED
RMBS
TYPES OF SECURITISATION ISSUED
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
<20%
PROPORTION OF OUTSTANDING 62% WHOLESALE FUNDING SOURCED VIA SECURITISATION
NUMBER OF SECURITISATIONS ISSUED
4
NUMBER OF SECURITISATIONS ISSUED
41
TOTAL VOLUME ISSUED
A$900M
TOTAL VOLUME ISSUED
A$16BN+
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
69% DOMESTIC 31% OFFSHORE
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
87% DOMESTIC 13% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$650M
OUTSTANDING VOLUME OF SECURITISED ISSUES
> A$3.5BN
L
a Trobe Financial is a leading credit specialist focused on residential and commercial assets. It offers credit solutions for prime and alternate-income-verification consumers that mainstream providers do not accommodate. Formed in 1952, La Trobe Financial has lent more than A$12 billion in mortgage loans for institutional and retail clients. La Trobe Financial’s diversified funding and capital-raising programme incorporates large term-debt facilities from local and international banks, an A$1.5 billion retail credit fund, and now a larger and complementary RMBS capital-markets programme. The company is well positioned for funding to support its strategic growth plans.
ABS, CMBS, RMBS
L
iberty Financial (Liberty) is a leading mainstream specialityfinance company. Its businesses include residential and commercial mortgages, motor-vehicle finance, personal loans and investments in Australia and New Zealand. Liberty has raised more than A$16 billion in domestic and international capital markets. Since 1997, Liberty has helped more than 250,000 customers achieve their financial goals. Liberty is also Australia’s only investment-grade-rated nonbank issuer (BBB, negative outlook, by S&P Global Ratings). It is also one of only a few lenders with an unblemished capital-markets record, with no ratings downgrades or charge-offs ever experienced by its originated securities or programmes.
◆ please contact:
Ryan Harkness Head of Debt Capital Markets +61 3 8610 2856 rharkness@latrobefinancial.com.au Martin Barry Chief Corporate Treasurer +61 2 8046 1502 mbarry@latrobefinancial.com.au www.latrobefinancial.com
◆ please contact:
Peter Riedel Chief Financial Officer +61 3 8635 8888 priedel@liberty.com.au www.liberty.com.au 39
ISSUER PROFILES
ME
MACQUARIE GROUP AUSTRALIAN ADI SECURITISATION PROGRAMME NAMES
YES SMART, PUMA
M
acquarie Securitisation (manager of the PUMA RMBS programme) and Macquarie Securities Management (manager of the SMART auto- and equipment-lease programme) are wholly owned subsidiaries of Macquarie Bank, which is a regulated authorised deposit-taking institution and part of the Macquarie Group. Macquarie Group is a global financial-services provider. It acts primarily as an investment intermediary for institutional, corporate and retail clients and counterparties around the world. Founded in 1969, Macquarie Group now employs more than 13,600 people in 27 countries around the globe. As at 31 December 2016, the group has total assets of A$503.4 billion. Macquarie Group is listed in Australia and is regulated by the Australian Prudential Regulation Authority as the owner of Macquarie Bank.
SMART PROGRAMME U S E O F SECURITISATION TYPE OF SECURITISATION ISSUED
ABS
NUMBER OF SECURITISATIONS ISSUED
33
TOTAL VOLUME ISSUED
A$26BN EQUIV.
CURRENCIES ON ISSUE
USD, AUD, EUR
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$7BN EQUIV.
PUMA PROGRAMME U S E O F SECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
NUMBER OF SECURITISATIONS ISSUED
60
TOTAL VOLUME ISSUED
A$54BN EQUIV.
CURRENCIES ON ISSUE
AUD
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$6.5BN EQUIV.
AUSTRALIAN ADI
YES
SECURITISATION PROGRAMME NAMES
MAXIS, SMHL
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED NUMBER OF SECURITISATIONS ISSUED* TOTAL VOLUME ISSUED TOTAL DOMESTIC VS OFFSHORE ISSUANCE
RMBS 46 A$44BN A$27.5BN US$10.4BN € €2.2BN
OUTSTANDING VOLUME A$5.9BN OF SECURITISED ISSUES *Combined Members Equity Bank Limited and historical mortgage-origination business.
M
E, which was rebranded from ME Bank in May 2015, was created 21 years ago to provide low-cost home loans and banking products to members of industry superannuation funds and unions. ME is 100 per cent owned by 29 industry super funds, which created the bank to help all Australians get ahead. Recently, ME opened its product offering to the broader Australian population and is committed to providing products that are straightforward and easy to understand. ME, which prides itself on its provision of great customer service, has a philosophy of supporting, educating and empowering its customers to achieve their financial objectives. ME’s new brand represents a modern, strong, innovative and secure bank in the digital era. The bank has been a regular issuer in securitisation markets since 1995. ◆ please contact:
◆ please contact:
David Ziegler Division Director, Group Treasury +61 2 8237 8069 david.ziegler@macquarie.com www.macquarie.com 40 · Australian Securitisation Journal | Issue 12_2017
John Caelli Treasurer +61 3 9708 3825 john.caelli@mebank.com.au Nathan Carr Manager, Funding +61 3 9708 3572 nathan.carr@mebank.com.au www.mebank.com.au
MOTOR TRADE FINANCE AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
MYSTATE BANK NO
AUSTRALIAN ADI
MTF
SECURITISATION PROGRAMME NAME
USE O F SE CU RI T I SA T IO N TYPE OF SECURITISATION ISSUED
ABS
NATIONAL AUSTRALIA BANK YES
AUSTRALIAN ADI
YES
CONQUEST
SECURITISATION PROGRAMME NAME
NATIONAL RMBS
U S E O F S ECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
USE OF SECURITISATION TYPES OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING 55% WHOLESALE FUNDING SOURCED VIA SECURITISATION
PROPORTION OF OUTSTANDING 56% WHOLESALE FUNDING SOURCED VIA SECURITISATION
OUTSTANDING SECURITISATIONS ISSUED
5 EXTERNAL RMBS
NUMBER OF SECURITISATIONS ISSUED
3
NUMBER OF SECURITISATIONS ISSUED
4 EXTERNAL RMBS
TOTAL NUMBER ISSUED
APPROX A$16BN (EXCLUDES RETAINED DEALS)
TOTAL VOLUME ISSUED
NZ$520M
TOTAL VOLUME ISSUED
A$1.5BN
A$2.3BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
72% DOMESTIC 28% OFFSHORE
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
TOTAL DOMESTIC ISSUES OUTSTANDING
100% DOMESTIC
7
NZ$314M
OUTSTANDING VOLUME OF SECURITISED ISSUES
TOTAL CROSS-BORDER TRANCHES ISSUED
A$567M
OUTSTANDING VOLUME OF SECURITISED ISSUES
M
otor Trade Finance (MTF) was formed in 1970 to enable selected New Zealand dealers to finance sales of motor vehicles to the public. MTF is one of New Zealand’s largest motor-vehicle financiers, operating in all major centres from Kaitaia to Invercargill. MTF originators come from a dealer network of more than 200 that sell motor vehicles and motorcycles in conjunction with financial services, and 43 MTF franchises that only sell financial services. Each originator participates in the profit of the business in proportion to the volume of business written, providing a compelling financial interest in the quality of business originated and the ongoing success of MTF.
◆ 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
M
yState Bank is a wholly owned subsidiary of MyState Limited – a national diversified financialservices group approved by the Australian Prudential Regulation Authority and listed on the Australian Securities Exchange. MyState Bank predominately operates in Tasmania with 10 branches servicing 120,000 customers. The Rock – a division of MyState Bank – predominately operates in central Queensland with seven branches servicing 40,000 customers. Both brands also provide lending and deposit-taking services via indirect channels.
◆ please contact:
William McShane Treasurer +61 3 6215 9554 william.mcshane@mystate.com.au Susan Castley Structured Finance Analyst +61 3 6215 9552 susan.castley@mystate.com.au www.mystate.com.au www.therock.com.au
N
ational Australia Bank is a major financial-services organisation in Australia and New Zealand with more than 10 million customers and 35,000 employees. It operates more than 1,000 retail branches and business-banking centres.
◆ please contact:
Eva Zileli Head of Group Funding +61 3 8634 8219 eva.zileli@nab.com.au Sarah Samson Head of Securitisation Origination +61 3 8641 2997 sarah.samson@nab.com.au www.nab.com.au 41
ISSUER PROFILES
PEOPLE’S CHOICE CREDIT UNION AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
YES LIGHT
USE O F SE CU RI T IS A T IO N TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
32%
NUMBER OF SECURITISATIONS ISSUED
5
TOTAL VOLUME ISSUED
PEPPER GROUP AUSTRALIAN ADI
NO
AUSTRALIAN ADI
YES
SECURITISATION PROGRAMME NAMES
PEPPER RESIDENTIAL SECURITIES (PRS), PEPPER PRIME
SECURITISATION PROGRAMME NAMES
PINNACLE
U S E O F SECURITISATION RMBS
TYPE OF SECURITISATION ISSUED
PRIME RMBS
NUMBER OF SECURITISATIONS ISSUED
18 PRS (8 OUTSTANDING, 10 CALLED) 4 PEPPER PRIME (ALL OUTSTANDING)
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
13%
NUMBER OF SECURITISATIONS ISSUED
2
TOTAL VOLUME ISSUED
A$575M
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$125M
A$2.1BN
TOTAL VOLUME ISSUED
A$9.2BN
100% DOMESTIC
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
78% DOMESTIC 22% OFFSHORE*
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$563M
OUTSTANDING VOLUME OF SECURITISED ISSUES**
A$2.6BN, US$779.5M
A
◆ please contact:
Paul Farmer Manager, Treasury Funding +61 8 8305 1898 pfarmer@peopleschoicecu.com.au Heather Gale Treasurer +61 8 8305 1829 hgale@peopleschoicecu.com.au www.peopleschoicecu.com.au 42 · Australian Securitisation Journal | Issue 12_2017
USE OF SECURITISATION
TYPE OF SECURITISATION ISSUED
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
ustralian Central Credit Union, trading as People’s Choice Credit Union (People’s Choice), is Australia’s second-largest credit union, with approximately A$9.7 billion of total assets under advice and management. People’s Choice has 350,000 members serviced through branches in South Australia, the Northern Territory, Victoria, Western Australia and the Australian Capital Territory. People’s Choice is an authorised deposit-taking institution, is subject to prudential supervision under Australia’s Banking Act, and is regulated by the Australian Prudential Regulation Authority.
P&N BANK
* Two issues in the Pepper Prime series and four issues in the PRS series have included USD tranches, with the balance of the notes in AUD. ** As at 31 March 2017.
E
stablished in 2001, Pepper Group (Pepper) is a leading Australianheadquartered financial-services group, with businesses in Australia, Asia and Europe. The businesses encompass lending, asset servicing and corporate real-estate advisory. Pepper has expanded from being a nonconforming residential-mortgage lender to also offer prime residential mortgages, auto and equipment leasing, and personal loans. Pepper is a third-party servicer and asset manager across a range of asset classes. Pepper is listed on the Australian Securities Exchange and had more than A$52.4 billion in assets under management as at 31 December 2016. ◆ please contact:
Todd Lawler Group Treasurer +61 2 8913 3009 tlawler@pepper.com.au Matthew O’Hare Deputy Group Treasurer +61 2 9463 4624 mohare@pepper.com.au www.pepper.com.au
P
&N Bank (P&N) is Western Australia’s largest locally owned and managed bank. Operating under a customer-owned model, P&N’s primary focus is its 90,000 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 of A$3.9 million, P&N was Australia’s seventh-largest mutual bank as at March 2017. P&N is an authorised deposit-taking institution regulated to the same high standards as the major banks by the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, the Australian Transaction Reports and Analysis Centre, and the Australian Competition and Consumer Commission. ◆ please contact:
Phil Webster Senior Manager, Treasury +61 8 9219 7561 phil.webster@pnbank.com.au www.pnbank.com.au
REDZED LENDING SOLUTIONS AUSTRALIAN ADI SECURITISATION PROGRAMME NAME
SUNCORP GROUP
NO
AUSTRALIAN ADI
NO
AUSTRALIAN ADI
YES
REDZED
SECURITISATION PROGRAMME NAMES
RESIMAC PREMIER, RESIMAC BASTILLE, RESIMAC AVOCA, RESIMAC VERSAILLES, RESIMAC UK RMBS
SECURITISATION PROGRAMME NAME
APOLLO
USE O F SE CU RI T I SA T IO N TYPE OF SECURITISATION ISSUED
RESIMAC
RMBS
PROPORTION OF OUTSTANDING 55% WHOLESALE FUNDING SOURCED VIA SECURITISATION
U S E O F S ECURITISATION TYPES OF SECURITISATION ISSUED
RMBS, NIM BOND
NUMBER OF SECURITISATIONS ISSUED
4
PROPORTION OF OUTSTANDING 78% WHOLESALE FUNDING SOURCED VIA SECURITISATION
TOTAL VOLUME ISSUED
A$780M
NUMBER OF SECURITISATIONS ISSUED
38
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
80% DOMESTIC 20% OFFSHORE
TOTAL VOLUME ISSUED
A$21.2BN
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$465M
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
55% DOMESTIC 45% OFFSHORE
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$4.7BN
F
ounded in 2006, RedZed Lending Solutions (RedZed) is a provider of specialist residential and commercial lending products primarily focused on meeting the needs of the self-employed. It works with a limited range of introducers selected for their expertise in the specialist-lending market. In December 2016, RedZed acquired ME’s business bank which has expanded RedZed’s commercial portfolio and allowed it to enhance its proposition to self-employed Australians by adding asset-finance products and directlending capabilities. RedZed has completed four RMBS transactions, the most recent of which took place in April 2017 for A$300 million.
R
esimac is a leading nonbank financial institution which commenced operations in 1985. The company has now offers a suite of prime and specialist-lending products tailored to the residential markets in Australia and New Zealand. In October 2016, Resimac merged with Homeloans, an Australian Securities Exchange-listed nonbank lender with a nationwide presence. Resimac’s capital-markets activities will continue under the various Resimac programmes, with securitisation core to its enterprise strategy. The group remains one of the most prolific Australian nonbank issuers.
◆ please contact:
◆ please contact:
Chris Wilson Chief Financial Officer +61 3 9605 3500 cwilson@redzed.com www.redzed.com
Mary Ploughman Chief Executive Officer +61 2 9248 0308 mary.ploughman@resimac.com.au Andrew Marsden General Manager, Treasury and Securitisation +61 2 9248 6507 andrew.marsden@resimac.com.au www.resimac.com.au
USE OF SECURITISATION TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING WHOLESALE FUNDING SOURCED VIA SECURITISATION
16%
NUMBER OF SECURITISATIONS ISSUED
21
TOTAL VOLUME ISSUED
A$23.8BN
TOTAL DOMESTIC VS OFFSHORE ISSUANCE
79% DOMESTIC 21% OFFSHORE*
OUTSTANDING VOLUME OF SECURITISED ISSUES
A$3.3BN
* Based on notes only.
S
uncorp Group is a top-20 Australian Securities Exchangelisted company with A$96 billion in assets. The company has evolved into a unique franchise, delivering highly valued banking, wealth and insurance products and services across Australasia. The group employs approximately 13,500 employees and serves approximately nine million customers through its trusted brands. Suncorp Bank is one of Australia’s leading banks with a million personal, SME and agribusiness customers. ◆ please contact:
Simon Lewis Head of Funding +61 7 3362 4037 simon.lewis@suncorp.com.au Andrew Power Team Leader, Long-Term Wholesale Funding +61 7 3362 4016 andrew.power@suncorp.com.au Maddalena Gowing Team Leader, Securitisation and Covered Bonds +61 7 3362 4038 maddalena.gowing@suncorp.com.au www.suncorpbank.com.au 43
ISSUER PROFILES
WESTPAC BANKING CORPORATION AUSTRALIAN ADI
YES
W
estpac Banking Corporation (Westpac) is Australia’s second-largest banking organisation and one of the largest banking organisations in New Zealand. The bank provides a broad range of banking and financial services in these markets, including retail, business and institutional banking, and wealth-management services. As at 30 September 2016, Westpac had total assets of A$839 billion. Westpac’s ordinary shares and certain other securities are quoted on the Australian Securities Exchange and, as at 30 September 2016, the bank’s market capitalisation was A$99 billion.
RMBS PROGRAMME U S E O F SECURITISATION SECURITISATION PROGRAMME NAMES
WESTPAC SECURITISATION (WST), CRUSADE RMBS
TYPE OF SECURITISATION ISSUED
RMBS
PROPORTION OF OUTSTANDING 3.9% WHOLESALE FUNDING SOURCED VIA SECURITISATION1 NUMBER OF SECURITISATIONS ISSUED TOTAL VOLUME ISSUED2 TOTAL DOMESTIC VS OFFSHORE ISSUANCE3
42 APPROX. A$78.6BN 86% DOMESTIC 14%OFFSHORE
OUTSTANDING VOLUME APPROX. A$8BN OF SECURITISED ISSUES ∗ 1 Includes RMBS and ABS. As at 30 September 2016. 2 Approx. 50% Crusade RMBS, 50% WST RMBS. 3 Based on issues currently outstanding.
ABS PROGRAMME U S E O F SECURITISATION SECURITISATION PROGRAMME NAME
CRUSADE ABS
TYPE OF SECURITISATION ISSUED
ABS
PROPORTION OF OUTSTANDING 3.9% WHOLESALE FUNDING SOURCED VIA SECURITISATION1 NUMBER OF SECURITISATIONS ISSUED TOTAL VOLUME ISSUED2 TOTAL DOMESTIC VS OFFSHORE ISSUANCE3
8 APPROX. A$8.6BN 100% DOMESTIC
OUTSTANDING VOLUME OF SECURITISED ISSUES
APPROX A$4.2BN ∗ 1. Includes RMBS and ABS. As at 30 September 2016. 2. 100% Crusade ABS. 3. 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 44 · Australian Securitisation Journal | Issue 12_2017
The second annual KangaNews Nonbank Yearbook The second annual KangaNews Nonbank Yearbook will be published later this year, in time for the ASFâ&#x20AC;&#x2122;s annual conference. The yearbook will build on the success of the 2016 edition, updating on key issues in the nonbank lender sector as well as providing detailed funding insights into participating firms. If you are interested in being involved, either as a participating nonbank or an active service provider in the sector, or would like a hard copy of the 2016 edition, please contact: Jeremy Masters jmasters@kanganews.com +61 2 8256 5577
You can see the 2016 KangaNews Nonbank Yearbook at www. kanganews.com/ magazine