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ABSF Update

8 July 2020

On 2 April the AOFM announced the first approved investment by the ABSF, in securities issued by a warehouse vehicle sponsored by Judo Bank. At the same time the AOFM also indicated that it would make an assessment of market conditions in early July before calling for further ABSF investment proposals.

While conditions have improved in the Australian securitisation market since early April, they remain challenging. Moreover the AOFM sees its mandate with regards to the ABSF as primarily an exercise in market development. This will be achieved through sponsoring the establishment of a track record in different types of SME lending under a standardised loan level data template. It is expected that this track record will support the work of credit rating agencies and ultimately private sector investment in this asset class.

The design of a data template has progressed but the ASF-sponsored working group undertaking this work with the AOFM was temporarily suspended in March.

The AOFM believes that in the current environment, this work should remain on hold. Consequently it will not be calling for another round of investment proposals for the ABSF at this time. The AOFM is well placed to monitor market developments closely through its work with the SFSF and will provide an update on its deliberations with regards to the ABSF by no later than the end of September.