The COVID Diaries: securitisation banker 2
The following interview is with an Australia-based securitisation banker. It was conducted on 24 June 2020.
Australasia has fared extremely well on a relative basis in the public-health stage of the crisis, but we are now seeing diverging performance between New Zealand and Western Australia at one end of the spectrum and Victoria at the other. How optimistic are you about the prospects for further easing of restrictions, and do you think we might actually be entering the most challenging phase of the crisis from a policy perspective?
Some of our global staff have been back in their offices for quite some time and others are still a while away from this. In Australia we have started rotating with two weeks in the office and two weeks working from home.
We remain optimistic for further easing in Australia and New Zealand. The clusters in Victoria are obviously an interesting development recently, but things have been under control and I think they will be able to nip this outbreak in the bud. We are optimistic and open for business.
Does that optimism carry through to the economic side of the crisis?
We are now clearly experiencing negative economic growth but that was expected from the start and at least some of the results in the economy are now becoming known. At the start of the crisis, there were complete unknowns around the potential extent of the economic impact.
There is still some caution on sectors that are most affected by the lockdown, such as tourism and hospitality, and concern for the employees in those businesses. But globally Australia and New Zealand are seen as bright spots. Hopefully this continues.
“There have been major, tragic events in the past, where the expectation was that things would change but not much actually did.”
The Australian securitisation market has come back quicker than anyone was predicting in March. What insights do you have on Australian securitisation compared with other global securitisation markets?
The Australian government has been very supportive of the market and helped with its return through the AOFM [Australian Office of Financial Management]’s structured finance support fund as well as various other support measures like the SME guarantee. The expectation was that issuers would take advantage of these and get the market going as quickly as possible – and this has clearly happened.
In global markets, the US has had a strong return with transactions coming through regularly in a range of asset classes. The government has been strongly supportive of the sector in the US as well by making the term asset-backed securities loan facility available to the market participants.
In Europe the public market has not been as quick to return but there are public deals being done, and there has been a lot of activity in the warehouse space with extensions and increases. Banks in Europe have been supportive of the sector and many were well prepared going into the crisis. From what I have seen, this period has been well managed in Europe in the securitisation space.
Not surprisingly, there has been some repricing in all jurisdictions across private and public markets.
Do you subscribe to the view that this crisis will radically reshape our society, or do you think there will be reversion to previous norms?
I think it will depend on the impact it ends up having, as well as the length of the crisis. There have been major, tragic events in the past, where the expectation was that things would change but not much actually did. Having said this, the pandemic is a prolonged event with a widespread impact that a lot of people are feeling, so I suspect there will be a shift in some areas.
At the very least, people will work from home more as this has clearly been proven to be effective and I think unfortunately travel will be affected for a long time.
When do you think you will next get on a plane for business or leisure? Are you looking forward to or dreading travelling again?
What are you most looking forward to being able to do again, as restrictions ease in the coming weeks and months?