Securitisation fund bill passed
The bill to establish the Australian Business Securitisation Fund has made it through the parliamentary logjam, with its passage in the Senate on Wednesday.The ABSF will invest in securities issued by warehouses and special purpose vehicles, with the aim of supporting the ability of small lenders to grow and provide credit to underserviced segments of the SME market.In this way, the government hopes to make the SME lending sector more competitive.The government has committed A$2 billion to the scheme, which will be credited to the fund over four years. The first payment into the fund will be $250 million, to be made on 1 July.The Australian Office of Financial Management will manage the fund.The money will be used to invest in securities assets backed by SME loans. Authorised debt securities must be issued by a trust or a body corporate that is a special purpose vehicle.The underlying credit provided to each business must be provided predominantly for business purposes and be less than $5 million. The bill allows for other criteria and limitations to be set, depending on how the market develops.The treasurer has power to make directions, including strategies and policies to be followed in making investments and decision-making criteria for making an investment.A ministerial direction cannot have the purpose of directly or indirectly requiring an authorised delegate to make a particular investmentThe fund will reinvest capital and earnings. The scheme will be reviewed after two years.