The Australian Business Securitisation Fund has made good on its commitment to underwrite securitisation transactions, providing an underwrite for Prospa Group’s latest issue of asset-backed securities.

On Friday, small business lender Prospa announced the pricing pf PROSPArous Trust 2024-1. The issue raised A$200 million, with the $124.4 million of A notes priced at a margin of 200 basis points over the one-month bank bill swap rate.

Prospa said the transaction was fully subscribed, “with demand from large real money investors”.

The ABSF underwrote $65 million of the A notes but was scaled back to zero.

In 2022, the Australian Office of Financial Management, which administers the ABSF, announced that it would consider proposals to partially underwrite senior tranches of public term securitisation transactions backed by SME lending. It will also consider underwriting mezzanine tranches with investment grade ratings. 

The AOFM said it may waive some of the submission requirements for term public transactions where it is familiar with the issuer from past proposals. The ABSF invested $95 million Prospa’s first PROSPArous issue in 2022.

“An important consideration will be whether pools to support transactions comprise loans predominantly from underdeveloped segments of the SME lending market,” the AOFM said.

Issuers required to adopt and implement the SME lending data template published by the Australian Securitisation Forum.

The AOFM requires that the ABSF is the first investor to be scaled in the book-build process, consistent with the aim of attracting and not crowding out investors.

Surprisingly, in its announcement Prospa acknowledged the joint lead managers of the transaction (NAB, Westpac and Societe Generale) and the arranger (NAB) but did not mention the ABSF’s role.