Dan
MME already has a number of these (just look at their balance sheet and you will see both MME & SocietyOne have these "Trust", and what has constrained the business is that it would have been hard/expensive to expand those facilities in the last few years with uncertainty around interest rates, the uncertainty around MME's credit modelling (i.e. how reliable were their credit modelling of existing loans), and then uncertainty around the Australian consumer (i.e. cost of living and how stretched are they that they start defaulting on new debts that MME may take on board).
I'm guessing that with some more certainty around the interest rate environment, MME's ability to demonstrate that their loan book credit quality has improved, and potentially higher pricing on previous warehouse facilities or ABS facilities, they made the call to consolidate a couple of the facilities into this with as I said lower pricing (gain improved Equifax scores, potentially loans with client asset backing). Perhaps it also reduced the amount that MME have to put up as restricted cash as they I imagine take losses up front (MME are liable for losses not lenders/investors into this ABS) hence this may have freed up some further cash.,,,,again this is me guessing rather than knowing for certain.
Having said all of that, I'm hoping at a minimum that it has reduced the cost and hence increase MME's margins, and also this is helpful if they want to come to market again and repackage other facilities they have as it seems to indicate that investors are getting more comfortable with the state of the consumer credit market (i.e. no one is pointing to massive losses despite all the ;cost of living pressures' we keep on hearing about).
Having said all of that, it still does not mean that MME can suddently throw the gates wide open.....accounting policy indicates that they have to recognise losses upfront, hence if write a 10k loan, they need to book a provision for a % of that loan and that comes through the P&L in that period even though any potential loss will only eventuate over the term of that loan......they cannot avoid this hence growth is very challenging until credit markets open up and someone gives them a truckload of money to lend to the market (which seems unlikely.....although Plenti managed to do that arrangement with NAB)
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DanMME already has a number of these (just look at their balance...
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