The Australian Office of Financial Management has released its requirements for access to its Forbearance Special Purpose Vehicle and called for expressions of interest, saying it expects to be in a position to start on-boarding participants this month.
The AOFM wants to know the number and volume of assets currently in COVID-19 hardship for each securitisation trust, the number and volume of assets in arrears and other information that will allow it to assess the lender’s capacity to repay any funds advanced under the fSPV program.
The fSPV was developed with the Australian Securitisation Forum, as part of the Structured Finance Support Fund, to support small lenders impacted by loan repayment deferral arrangements in their securitisation vehicles.
The AOFM will use the SFSF to invest in the senior ranking securities issued by the fSPV. It will fund the missed interest payments of loans directly affected by COVID-19. It will not fund missed principal payments, fees or any other charges.
A single SPV that caters to all lenders was chosen because it would be quicker to implement than a trust-by-trust structure.
After March 30 next year, participating lenders will start paying back the funds drawn from the fSPV. The repayment period will be up to five years for long-dated assets such as mortgages and three years for shorter-dated assets such as consumer loans.
The chief executive of the ASF, Chris Dalton, said: “Lenders using securitisation vehicles depend on the excess spread from these transactions to provide their working capital. Deferrals reduce their cash flow and by drawing down on this forbearance SPV they can replenish that cash flow.”
BNY Mellon has been appointed trustee, trust manager and security trustee for the fSPV. Deloitte will be the collateral verification agent.
In an update on its use of the SFSF, the AOFM said it supported nine of 10 public securitisation transactions up to June 30, either directly or indirectly through “switches”. The level of SFSF support averaged just under 20 per cent of a total of A$6 billion of issuance.
Issuers included Firstmac, Liberty, La Trobe, Resimac, Columbus Capital, Pepper Red Zone and Bluestone. Support ranged from 9.5 per cent of the $1.2 billion La Trobe deal to 42.3 per cent of the $700 million Pepper deal.
In the private market, at June 30 the AOFM had used the SFSF to support 24 warehouses with $1.5 billion of funds. The total capacity of warehouses for which support has been provided is $12.4 billion.
The AOFM said it has had a deliberate skew to investment in the mezzanine tranches of warehouses, where the market dislocation has been greatest.
Consumer lender Wisr announced yesterday that the AOFM had approved an initial investment of $30.8 million in the Wisr Warehouse, which has a capacity of $200 million.