Australian Business Securitisation Fund Investment Mandate Directions 2019

I, Josh Frydenberg, Treasurer, make the following directions.

Dated 10 April 2019

Josh Frydenberg

Treasurer

Contents

Part 1—Preliminary

1 Name

2 Commencement

3 Authority

4 Definitions

5 Purposes of instrument

Part 2—Directions

6 Investment strategies and policies

7 Investment decision‑making criteria

8 Investment risk and return

Part 1—Preliminary

1  Name

  This instrument is the Australian Business Securitisation Fund Investment Mandate Directions 2019.

2  Commencement

 (1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

 (2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3  Authority

  This instrument is made under subsection 13(1) of the Australian Business Securitisation Fund Act 2019.

4  Definitions

  In this instrument:

Act means the Australian Business Securitisation Fund Act 2019.

financial asset has the same meaning as in the Future Fund Act 2006.

SME securitisation market means the market for debt securities that relate to credit provided to small and medium enterprises.

5  Purposes of instrument

  For the purposes of subsection 13(1) of the Act, Part 2 of this instrument sets out directions about the exercise of the Minister’s powers under section 12 of the Act.

Part 2—Directions

6  Investment strategies and policies

  In making investments, the Minister must prioritise the following:

 (a) investments in underdeveloped sectors of the SME securitisation market;

 (b) investments that assist the long‑term development of the SME securitisation market;

 (c) investments that encourage investment in the SME securitisation market by the private sector;

 (d) investments that are likely to promote competition in the market for providing credit to small and medium enterprises;

 (e) investments in debt securities that do not relate wholly or predominantly to credit provided for investments in financial assets or residential property.

7  Investment decision‑making criteria

  In making an investment, the Minister must consider the following:

 (a) whether the making of the investment will be consistent with the strategies and policies in section 6;

 (b) the potential of the investment to affect other participants or prospective participants in the SME securitisation market, having regard to the strategies and policies in section 6;

 (c) if the investment will be made at a rate of return that is less than the market rate—whether such an investment is reasonably required, having regard to:

 (i) the strategies and policies in section 6; and

 (ii) the other decision‑making criteria in this section;

 (d) whether the investment will affect the ability of the Fund to exit the SME securitisation market in the long‑term without causing significant market dysfunction;

 (e) whether the making of the investment will be appropriate, having regard to the matters relating to risk and return mentioned in section 8;

 (f) whether the making of the investment will be consistent with the Act (including the objects of the Act).

8  Investment risk and return

  In making investments, the Minister must:

 (a) ensure that the investments of the Fund have an acceptable but not excessive level of risk, having regard to the objects of the Act; and

 (b) aim to achieve over the medium‑term a net financial return on the investments of the Fund that is not lower than the corresponding return on the Bloomberg AusBond Treasury 0‑1 Yr Index.

Note: Paragraph (b) accounts for variability in business and market conditions.