Firm advises on $3bn Aussie pilot ‘master trust’

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King & Wood Mallesons has advised on one of Australia’s first ‘master trust’ securitisation programmes in Australia, Volkswagen’s $3bn automotive-backed Driver Australia Master Trust programme.

A structure common in Europe, a master trust allows issuers to issue multiple series of notes with different amortisation profiles to debt capital markets backed by the same pool of receivables, lead partner on the deal Paul Smith said. 

“These structures are rarely used in Australia because current prudential regulations effectively prevent authorised deposit-taking institutions (ADIs) from establishing these structures,” he told Australasian Lawyer.

“Over the next 12 months, we expect that ADIs will be closely looking at establishing their own master trust programs. 

“While the new prudential regulation is not expected to be implemented until 1 January 2018, APRA has left open bringing forward the implementation of that part of the prudential regulation that would allow master trusts.”

Smith said that as a result of industry feedback, APRA released a draft of proposed prudential standard governing securitisation and a discussion paper, generally well received by the industry as highlighting the funding benefits of master trusts.

“Master trusts are seen by ADIs as providing funding efficiencies and flexibility,” he said.
“We are delighted to continue to support VW’s Driver Australia programmes.  The master trust programme will provide VWFS Australia with ongoing funding efficiencies and flexibility, complementing its successful term deal programme.”

The KWM team acted on VWFS Australia’s two most recent Australian ABS issuances, Driver Australia Two and Driver Australia Three, raising A$463 million and A$531 million respectively.