Lenders that tap the AOFM’s forbearance special purpose vehicle to mitigate the impact of loan deferral arrangement in their securitisation vehicles will be able to leave assets in the underlying originator trusts, under the structure devised for the scheme.

The Australian Securitisation Forum has released the key features of the fSPV, which the AOFM will use to fund missed interest payments of loans directly affected by COVID-19.

Under the terms of the fSPV, an originator may elect to have a single trust or multiple trusts participate.

Each participant originator must have a “reimbursement agreement”, which is an agreement with another member of their originator group - typically the servicer.

Under the reimbursement agreement, each originator group will provide a liquidity payment to the originator trust to cover 90 per cent of eligible COVID-19 hardship deferred interest payment amounts.

In exchange for that liquidity payment, those originator trusts will reimburse the member of the originator group from waterfall payments on agreed terms.

The ASF said the idea of this structure is to leave assets in the underlying originator trusts and create a new receivable between those originator trusts and a member of the originator group, which can then be sold into the fSPV.

The AOFM will be making senior investments only, so the participant originator will be required to make a Class B first loss contribution to provide first loss protection.

Once all this is in place the participant originator can sell reimbursement receivables from a number of underlying originator trusts.

Money will be paid back to the AOFM according to a schedule with agreed increments, over three years in the case of short-dated assets and five years for longer-dated assets.

BNY Mellon has been appointed trustee, trust manager and security trustee for the fSPV. Deloitte will be the collateral verification agent.