ABIP earns wider mandate

The Australian government may co-invest in commercial loans in any industry sector and will not confine its lending to commercial property and construction as first suggested by the government when confirming it would adopt this policy in January.

This means that plans for federal government aid for the corporate lending market will have a wider focus and in line with the original proposals from big banks first talked through in November and December last year.

The background to setting up the scheme is the belief that foreign banks will progressively decline to refinance corporate loans as some have done in some circumstances over recent months, though only in a limited fashion.

The enabling legislation for the Australian Business Investment Partnership clarifies that the first objective is to refinance commercial property loans and property development projects where finance is not available but which are not otherwise seen as viable.

A second objective is to provide finance in other areas of commercial lending.

The Australian government will tip in $2 billion as a capital base for the fund and the four major banks $500 million each, while the fund will aim to borrow $26 billion.