bendigo subsidary losses increase

Asset-Backed Yield Trust not yet in the clear October 09, 2009
Article from: Australian Associated Press

IMPAIRMENTS charges for Adelaide Managed Funds' Asset-Backed Yield Trust (AYT) have been raised due to its indirect exposure to the collapsed agricultural products manager Great Southern.

The trust's responsible entity, Adelaide Managed Funds (AMF), said yesterday it had raised the impairment provision carried by AYT to $16.7 million, from an initial $4.3m.

The increase would not affect the trust's September quarter distribution of 3.8c per unit and was not expected to affect the current financial year's distributable income, AMF said.

"However, AMF continues to monitor the performance of MIS (managed investment scheme) investments and further developments may reduce our ability to continue to deliver this yield," it said.

AYT invested in a securitisation program that had lent money to individuals who had invested in a Great Southern-backed MIS.

Its investment has a face value of $22.3m, equal to 12.3 per cent of its investment portfolio.

Great Southern, which operated 45 forestry, horticulture and cattle managed investment schemes on behalf of 43,000 investors, was placed in administration and receivership in May after its cashflow dried up and it was unable to draw more support from its bankers.

AMF said there had been an increase in the number of borrowers who had sought legal advice in relation to their loan obligations and had chosen not to meet their loan repayments.

It also said the servicer of the loans, Bendigo and Adelaide Bank, had modified its approach to collections and the pursuit of payments from borrowers whose loans were in arrears.

"These factors have resulted in the AMF board increasing its expectations of future losses within the underlying portfolio," AMF, a subsidiary of Bendigo and Adelaide Bank, said.

The bank said in a separate statement that it continued to "actively manage and closely monitor" its portfolio of loans to Great Southern MIS investors.

AYT units fell 12c, or 8.28 per cent, to $1.33 yesterday.