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Guardian Trust expands capability in growing NZ securitisation market

Guardian Trust is implementing Moody’s Analytics’ ABS Suite to position itself for expected growth in the New Zealand securitisation market. The trustee says it intends to provide its clients with more insightful analytics and enhanced service offerings as a result of the tie up.

ABS Suite provides end-to-end structured-finance administration to support securitisation issuance. Guardian Trust will use it to enhance its trust-management service offering, increase operational efficiency and to enable automation of issuers’ manual processes in structured-finance transactions.

As a trustee service provider, Guardian Trust aims to add value to its clients by creating operational efficiencies so the administration of securitisation programmes does not detract from clients’ ability to meet their business objectives, says Craig Manley, chief operating officer at Guardian Trust in Auckland.

Asif Saleem, the trustee’s Auckland-based head of wholesale products, adds that Guardian Trust has always provided value-add services to clients – such as reporting and waterfall modelling. He says the purpose-built Moody’s Analytics platform will enhance Guardian Trust’s ability to provide these high-quality services in a growing market.

“As the New Zealand securitisation market matures and originators of securitisation programmes look to implement robust processes and controls, ABS Suite will provide us the functionality to deliver in areas such as full-service trust management and portfolio management more efficiently,” Manley says.

“As the New Zealand securitisation market matures and originators of securitisation programmes look to implement robust processes and controls, ABS Suite will provide us the functionality to deliver services such as full-service trust management and portfolio management more efficiently.”

Guardian Trust believes that having a specialist, third-party, trust-management service provider in New Zealand will benefit established issuers by providing them with a solution to outsource this key function so they can then focus on core areas of their business such as loan origination and servicing.

The provision of detailed data and reporting could be key to New Zealand securitisation becoming a mature market, and Guardian Trust believes it can help support this. ABS Suite provides greater functionality to record and store data that the trustee’s clients can use to provide more insightful analytics to their investors and the wider market.

“Increased issuance in the New Zealand securitisation market is attracting new domestic and international investors. ABS Suite will allow us to provide our issuers with the data required by investors and rating agencies in a more efficient and standardised manner,” Saleem says.

For new and existing entrants to the market, Guardian Trust aims to provide a turn-key solution for establishing and administrating their securitisation programmes via provision of trustee and trust-management solutions. It intends for this process to be efficient to establish and scaleable.

“We are seeing greater appetite from nonbank lenders to establish wholesale funding arrangements to complement or replace existing funding sources. The current interest-rate environment is also enabling the nonbank sector to compete with banks and increase market share.”

EXPANDING MARKET

The New Zealand securitisation market could be approaching a new evolutionary phase and participants are increasingly confident that critical mass is developing. The market has already grown through relatively regular issuance from nonbank lenders such as Avanti Finance, Resimac, humm, Eclipx and MTF Finance.

Interest in securitisation is being aided by nonbank growth and by the increasing regulatory scrutiny of retail funding models. Reserve Bank of New Zealand (RBNZ) data show aggregate nonbank lending to the housing, personal and business sectors increased by 28.6 percent from March 2019 to March 2021.

As securitisation is often the most efficient means for nonbanks to fund growth, many market participants expect the depth and breadth of New Zealand securitisation to grow in the coming years. Saleem says: “We are seeing greater appetite from nonbank lenders to establish wholesale funding arrangements to complement or replace existing funding sources.”

Momentum continues to build in the background through establishment of and increases to warehouse facilities, as well as activity in the private securitisation market.

Along with increased issuer activity in the sector, established market participants report that investor interest has also been broadening, particularly with the adjustment of some KiwiSaver mandates to allow for securitisation investment.

Guardian Trust believes ABS Suite will be equally applicable and useful for New Zealand banks, which traditionally have not used securitisation for funding but may do so in future depending on the outcome of the RBNZ’s long-mooted residential mortgage obligation reforms.

While the New Zealand securitisation market is still in its relative infancy, Manley says it is important to implement improved systems and invest in technological innovations ahead of the expected expansion. 

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