The Australian Office of Financial Management has received a proposal for a multi-seller warehouse that the AOFM would support through the Structured Finance Support Fund.
A consortium including NEU Capital, AMAL Trustee, Grant Thornton and Clayton Utz has submitted a proposal for a Small & Medium Originator Program, which would aggregate the portfolios and capital requirements of multiple originators into a multi-seller special purpose vehicle.
According to the SMOP proposal, all receivables would be cross-collateralised and subject to uniform eligibility criteria, portfolio parameters, reporting requirements and governance.
Product groups would include consumer loans, small business loans, residential mortgages and property development finance.
“Broad standardisation reduces the marginal cost of onboarding and managing each originator, delivering a scalable and cost-efficient structure,” the proposal says.
“Aggregation of receivables pools from multiple originators delivers large and diversified receivables portfolios, ensuring capital requirements are of sufficient scale to attract major financial institutions while reducing concentration risks.”
Cashflows to and from each originator would replicate a non-collateralised outcome, meaning that originators would not be exposed to the risk of other originators.
The SMOP would have “a familiar securitisation structure”, including an equity trust that would provide risk-priced credit enhancement and other risk controls.
The consortium said that after publication of an initial discussion paper, it received A$1.5 billion of demand for funding from more than 24 “qualified originators”.
The AOFM said in a statement yesterday that it would work with the consortium with a view to the SFSF becoming an investor in the securities issued by the SMOP.
It said the SMOP is currently the only multi-seller proposal it has under consideration.
The consortium said the advantage for the AOFM would in being able to invest $1 billion or more in a large number of originators through a single conduit.