GOUMENIS Some proposed regulations placed Australia effectively on a noncooperative list from a tax perspective, which meant certain European investors would not be able to invest in SPVs [special-purpose vehicles] coming out of Australia.

Luckily for us, the final approach seems to have changed whereby investors only need to give notice to their local taxing authorities that they are investing in transactions from SPVs in noncooperative tax jurisdictions. It does not seem to be a roadblock.

Legislation has been passed addressing the offshore-banking-unit issues that were causing Australia to be on the noncooperative tax list, and we are just waiting for the royal assent of this legislation. It seems the issue has been put to bed, at least from a regulatory perspective.

GAAL It is playing out with investors on the ground, too. It just became another process they needed to go through to get their approvals to participate in a transaction. Like most things, it takes time to bed down internal processes associated with the notification.

We are now finding, once organisations have gone through compliance and reporting requirements, the necessary protocols have been established. When a transaction works from an investment perspective, investors should now be able to participate and meet the requirements.

WAGSTAFF We have seen a wave of enquiry about doing ESMA [European Securities and Markets Authority] reporting for warehouses and term deals. Interestingly, this is predominately for UK investors. The deals can never be STS [simple, transparent and standardised] compliant, but these investors still want the format that is most compatible for their systems.

Clearly, issuers and investors think there is going be more offshore funding. I think it is likely still to be in Australian dollars, as most investors are big enough to do the swaps themselves. But issuers certainly want to be able to meet the European reporting requirements even on their nonmortgage ABS [asset-backed securities] deals.

GOUMENIS The only other thing I would mention from a regulatory perspective is that APRA [Australian Prudential Regulation Authority] has been asking some questions in connection with warehouses. Some of these questions relate to things like interest-offset accounts, which could potentially affect term transactions.

We are still waiting for this to play out, but there are potentially some regulatory wrinkles we as an industry will need to work through.

GAAL Once market participants get their heads around why APRA asked for these changes it should not really preclude investors from participating in transactions going forward.

SPATA Investor diversification as a principle remains critical for us, to ensure we continue to grow our investor base and we are not too reliant on a concentrated funding base.

Having said this, we have not felt the need to invest as much time offshore as perhaps we have done in the past given the demand on the domestic side. We are also of course limited in our ability to travel offshore. A lot of offshore investors, particularly in Asia, want face-to-face contact – we need to put the time in.

We did this prior to COVID-19 and we have seen some of these investors come into our deal books, which has been really pleasing. But domestic demand has really supported our transactions over the past year.

Reporting requirements are also important. We have had discussions about this with BNY Mellon, and the way I would characterise this is that we still see some hurdles in relation to the investor requirements. ABS is a less trodden path in relation to EU and UK securitisation reporting.

The RMBS market is more developed for things like data templates, while there is still more work to be done on the ABS side. As offshore investor requirements on the reporting front continue to increase, this is becoming more of a limitation on participation until we make a shift forward.  Overall, a couple of factors have changed the focus a little more to the domestic side over the past 12 months or so.

WAGSTAFF Reporting is always a challenge, especially because everybody seems to want something different. The ASF [Australian Securitisation Forum] has done a really good job with the new SME template. Obviously, different types of businesses need to be looked at slightly differently – so there is still a lot of work for the issuer to do.

To this point, we provide a lot of support particularly for non-mortgage ABS information. We use our European business to help with the European angle, but we have a very strong team here as well.