Application criteria for acceptance of Asset Backed Commercial Paper (ABCP) and Asset Backed Securities (ABS) in Reserve Bank Domestic operations

Thank you for your interest in the Reserve Bank of New Zealand accepting your issuance as security in its liquidity operations. Please provide the information noted below and attest to the following statements:

Information

  • Background on the issuer (including all ratings);
  • Details of the issue, as per an Issue Notice, Prospectus and/or Information Memorandum. This should include:
    • Full legal name of Issuer;
    • Physical and postal address;
    • Description;
    • Issue size;
    • Issue margin (to bank bill) and any recent pricing
    • Assets in the pool
    • Liquidity providers
    • Pricing convention (full details)
    • Currency;
    • Trustee;
    • Arranger;
    • Dealers;
    • Registrar;
    • Paying agent;
    • Term;
    • Clearing system;
    • Governing law;
    • Redemption;
    • Payments and record date; and
    • Listing (Stock exchange if any).
  • Specific details on underlying assets within the pool.

Attestation

Confirm that the issue meets the following criteria:

  • ABS must have a long term AAA rating from at least one acceptable rating agency – this must be a public rating.
  • ABCP must have a short term A-1+ rating from at least one acceptable rating agency – this must be a public rating.
  • Issued and registered in New Zealand.
  • Issue denominated in New Zealand dollars.
  • ABCP and ABS must be lodged and settled in NZClear.
  • The securitised assets must be owned by a bankruptcy remote special purpose vehicle (SPV).
  • The originator is not in receivership or under moratorium.

General Considerations

  • ABCP and ABS are secured over specified New Zealand assets which may include, but not restricted to:
  • receivables (invoices, credit cards);
  • commercial mortgage backed securities (i.e., commercial, industrial and rural properties, but not construction and development projects);
  • hire-purchase agreements (various durable goods including housewares and motor cars);
  • equipment purchases (e.g., industrial equipment, "yellow goods" e.g., excavators and diggers);
  • the assets in the securities must make regular payments – in particular there must be no capitalising loans in the ABS pools; and

specifically excludes pools which include other securities and property development assets (including construction, "green fields" development and speculative activity).

  • There are no related party loans.
  • Loans may be included in the pool only if the originator has, prior to loan approval and as part of the loan origination and approval process, documented, assessed and verified the ability of the borrower to meet their repayment obligations.
  • Only loans that are performing may enter the pool (Non-performing loans are those that are 90 days or more past due).
  • Issue is plain vanilla.

Originators will be required to regularly update the Reserve Bank on the net value of the underlying asset pool and any changes to the assets in that pool.

The Reserve Bank assumes that the coupon on ABS will be in line with the average yield on the underlying asset pool and reserves the right to adjust the haircut for securities that don't meet these criteria. The Reserve Bank also reserves the right to adjust the haircut for any other reason.

As is usual for securities in NZClear, only NZClear members who have a valid resident withholding tax certificate are allowed to hold these securities in the NZClear depository.

The Reserve Bank reserves the right to refuse an application for any reason and is not required to disclose such reasons. In particular, it should be noted that if the credit rating of the issuer/issue falls below the Reserve Bank's threshold, then the issue will cease to be eligible in the Reserve Banks' operations.

The above information must be signed by authorised signatories of the Issuer. The Reserve Bank will require a list of authorised signatories for the Issuer and evidence satisfactory in form and substance to the Reserve Bank of the authority of the authorised signatories of the Issuer to execute this Agreement, any other notice or communication issued in respect of this Agreement on behalf of the Issuer.

Please email applications to dommkts@rbnz.govt.nz.