A smart move by artisans of the craft, the soon to be in place forbearance SPV structure the ASF has put together for the industry shows the best of banking.

Banks and NBFIs need to crash the SFSF and AOFM funding pools, and this gateway won’t easily be put aside. The AOFM will be wielding big numbers before long.

The proposal is for a single SPV to cater for multiple asset classes and participating lenders.

The SPV offers a revolving sale facility to each participating lender to purchase COVID-19 hardship reimbursement receivables, a definition easily substituted with wider forms of credit.

The Structured Finance Support Fund will be the sole subscriber to a Class A Variable Funding Note (Class A VFN) for each participating lender.

The interest rate on the Class A VFN currently proposed by the AOFM is 5 per cent.

Participating lenders will provide first loss credit support to the SPV by subscribing to a Class B Note to credit enhance the Class A VFN.

It’s 10 per cent down on unsecured SME lending, which is what the AOFM mostly wants, and one per cent on mortgages.