Media Releases & News
News
IOSCO publishes consultation on product regulation of securitisation
The International Organization of Securities Commissions (IOSCO) Technical Committee has published Unregulated Financial Markets and Products – Consultation Report (Report) prepared by its Task Force on Unregulated Financial Markets and Products ('TFUMP'). The Report contains interim recommendations for regulatory action designed to improve confidence in the securitisation process and the market for credit default swaps (CDS).
The Task Force is co-chaired by the Australian Securities and Investments Commission and the French AMF.
See media release and the report (the media release contains a summary of the interim recommendations).
The closing date for responses to the Report is 15 June 2009. It is anticipated that ASIC will conduct a consultation process in Australia in which the ASF will participate.
Release of National Consumer Credit Protection Bill 2009 - 30 April 2009 - submissions due Friday, 22 May 2009
A public exposure draft of the National Consumer Credit Protection Bill 2009 was released 27 April 2009. The Bill implements phase 1 of the Government’s Action Plan for single, standard, national regulation of consumer credit. The Bill will have a significant impact on any person involved in the origination, management and enforcement of both consumer credit and credit provided to purchase, renovate or improve residential property for investment purposes. The key features of the Bill include the establishment of a national licensing regime and the creation of responsible lending obligations.
What next?
Comments in response to the Bill are sought by Friday, 22 May 2009.
Click here to view the draft of the National Consumer Credit Protection Bill 2009.
Click here to view the Government’s Action Plan for single, standard, national regulation of consumer credit announced on 2 October 2008.
Click here to read client alert from Mallesons Stephen Jaques.
Click here to read client alert from Allens Arthur Robinson.
UK Budget announcement. Darling to 'reinvent' securitisation of mortgages
“The housing market is also being held back by a lack of mortgage credit. The Government has taken action to encourage an increase in mortgage lending – and this year, the major UK banks will increase the availability of mortgages by around £20bn. To build on this, today I can announce the introduction, following state aid approval, of the scheme to guarantee securities backed by mortgages – which will help to ease the flow of mortgage finance. Mr Deputy Speaker, the recession and the credit crunch have made it much harder for people to take their first step up the housing ladder. This is not just difficult for those involved – but also undermines the entire housing market. So, to help, I have decided to extend the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year. Sixty per cent of residential properties will continue to be exempt – encouraging modest and middle income homebuyers. I can also announce an £80m extension to HomeBuy Direct – the Government shared equity mortgage scheme, which has already received interest from over 32,000 people since September.”
Relevant sections from the UK budget papers that contain HMG's proposals for the securitisation markets
Chapter 3 of the Report on Financial stability ff45 – in particular sections 3.33 for remarks on the long-awaited Asset-Backed Securities Guarantee Scheme (was just awaiting competition approval from the European Commission on account of it constituting State aid))
Box C3 for the impact of the financial and housing sectors on the public finances
Box C4 for the impact of financial sector interventions on public finances projections
see Mayer Brown overview for all European official intervention
Barclays summary and analysis of ABS-GS
With the 2009 Budget announced in the UK, details were released regarding the much-discussed government guaranteed ABS, asking the questions as to whether this is the solution for the securitisation markets and, consequently, the UK mortgage market.
UK Budget 2009 and the UK government's 2009 ABS guarantee scheme
With the details of the budget announced, we give a brief description of the key points that affect RMBS - the most significant of which is the announcement of government guaranteed RMBS. The scheme was approved yesterday by the European Commission and is initially a six-month scheme offered until October 2009.
Eligibility
* This scheme is for RMBS-issued securities backed by mortgages over property in the UK.
* Available for all institutions that are able to participate in the 2008 Credit Guarantee Scheme.
* Stand alone, existing or new master trusts are eligible.
* Does not have to be GBP denominated securities.
* Must be rated AAA by at least two rating agencies before guarantee applied.
* Any mortgage loan sold to the SPV after the institution has joined the scheme must also:
- Originate post 1 January 2008
- 1st Lien mortgage
- Each mortgage loan <90% LTV
- WA LTV of mortgage pool <75% LTV
- No adverse credit history
Guarantee
* The guarantee is provided by HM Treasury
* Maximum term of guarantee is up to three years or five years - Up to one-third may be up to five years
* Two guarantees - both cannot be used together:
* Credit guarantee
- Unconditional and irrevocable
- Guarantee of the timely payment of all amounts due from the SPV
- Guarantor indemnified for any amount paid from the participating institution and SPV
* Liquidity guarantee
- Apply if an issuer fails to call on its call date or if the issuer fails to purchase on exercise of a put option by the investor.
- If the participating institution does not provide the SPV with the relevant funds to call the bonds, the guarantor will purchase those bonds from the investor (and hence become the new owner of those securities) at the relevant price.
* Relevant price = Outstanding principal amount + accrued but unpaid interest - PDL
* Guarantor indemnified for any amount paid out from the participating institution under an unsecured counter-indemnity.
* Guarantor entitled to hold or sell securities at its discretion at any time. Also entitled to require the participating institution to purchase the securities.
* Fee for the guarantee is based on 25bp + participating institution's median 5y CDS spread from 02/07/07 to 01/07/08
Initial thoughts
This scheme helps the existing investor base by bridging their concern about extension risk and noncall risk for any new issuance, and include a potentially new investor base interested in a guaranteed security on an already AAA-rated investment - in combination with a helping hand for the funding for lenders to increase mortgage lending - if they choose to use the scheme. But given the level of discussions that have surrounded this scheme and the length of time since it was initially proposed, it is obvious that the Treasury will have discussed the details with a number of market participants, so it is likely there will be issuance with this guarantee in the following few months. The question, though, is in what form will this issuance take? Master trusts? If so, existing shelves or a new programme? Where is it likely to be priced and how will these securities be structured: bullet notes with a short legal final maturity to tie in with the length of the guarantee?
Media Releases
The ASF maintain a catalogue of media releases regarding the ASF and the broader securitisation industry.
4 December 2008
Media Release: Restoring Confidence in the Securitisation Markets: A Global Initiative
22 September 2008
ASF National Committee Lunch with David Wyss S&P New York in Sydney, 20 August 2008
4 July 2008
Financial Services and Credit Reform Green Paper Submission by the Australian Securitisation Forum
21 November 2007
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