The AOFM has, however, been active in the public and private credit markets.
In 2008, Labor Treasurer Wayne Swan ordered the agency to buy an initial $8 billion of mortgage-backed bonds issued by non-bank lenders to prop up the securitization market and maintain competition. .
In November 2018, Coalition Treasurer Josh Frydenberg directed AOFM to establish a $2 billion Australian Corporate Securitization Fund, and in March 2020 established the Structured Finance Support Fund (SFSF). ) of $15 billion.
Approximately $3.8 billion of SFSC capital has been deployed in the public and private markets, of which a modest $700 million exposure remains after withdrawal, trade or transfer of investments to the Australian Business Securitization Fund.
The Future Fund, Mr Arndt said, was increasing its exposure to Australian corporate debt. Currently, the fund has allocated $20 billion, or 10% of its money, for debt investment. Of this amount, approximately 15% was invested in Australian business loans.
While banks played a crucial role in lending due to their credit analysis skills and ability to originate loans, there were a growing number of private lenders who were equally capable. This included offshore fund managers expanding their lending presence in Australia.
“They [debt funds] don’t have the same balance sheets and the same regulations, and they’re entering the market,” he said.