Ann: MONEYME executes $178m ABS transaction, page-10

Hi Steve

I agree that the wording of the notice is a bit ambiguous but I think it does represent new assets and new borrowings. I.e. assets are written first on MME’s own balance sheet and then, after say 4 to 8 weeks, transferred across to this new trust in exchange for borrowed cash. Usually securitisation trusts are drawn down gradually when there are new assets ready to be financed, not all drawn on day 1. I think it’s a NEW borrowing, not a refinancing of existing debt- but I concede that MME could have expressed it better to make that completely clear. It would be misleading not to have said so if it was merely a refinancing, rollover, or increase of an older facility.

Re the pricing, they disclose 1.35% over bank bills on the top tier/ least risky tranche. They don’t disclose the (higher) margins on the riskier lower layers. Based on a good example from HUM- which did disclose the margins and size of every tranche- I estimate that the weighted average cost of all the external funds supplied here would be about 2.4% to 2.7% over the bill rate BBSW. NB that excludes the return (if any) on the most subordinated/first loss tranche which MME itself would be required to invest- likely to be about 5-7% of the total $178m structure; 93-95% of the money comes from external banks etc..