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0097430-0000068 AU:4417822.3 1
THE PUMA PROGRAM Principal and Interest Notes
PUMA Series 2014-2
Information
Memorandum
Manager MACQUARIE SECURITISATION LIMITED
ABN 16 003 297 336
Arranger and Joint Lead Manager MACQUARIE BANK LIMITED
ABN 46 008 583 542
Joint Lead Manager AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
ABN 11 005 357 522
Joint Lead Manager J.P. MORGAN AUSTRALIA LIMITED
ABN 52 002 888 011
Joint Lead Manager NATIONAL AUSTRALIA BANK LIMITED
ABN 12 004 044 937
This Information Memorandum is dated 7 July 2014
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NOTE
Macquarie Securitisation Limited is a wholly owned subsidiary of Macquarie Bank Limited. Macquarie Bank Limited is participating as Arranger, Joint Lead Manager, Interest Rate Swap Provider and Redraw Facility Provider.
THE NOTES DO NOT REPRESENT DEPOSITS OR OTHER LIABILITIES OF MACQUARIE BANK LIMITED, MACQUARIE SECURITISATION LIMITED OR ANY OTHER MEMBER OF THE MACQUARIE GROUP OR THE JOINT LEAD MANAGERS OR THEIR RESPECTIVE RELATED BODIES CORPORATE. THE HOLDING OF THE NOTES IS SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE DELAYS IN REPAYMENT AND LOSS OF INCOME AND PRINCIPAL INVESTED.
NEITHER MACQUARIE BANK LIMITED, MACQUARIE SECURITISATION LIMITED NOR ANY OTHER MEMBER OF THE MACQUARIE GROUP NOR THE JOINT LEAD MANAGERS (NOR ANY OF THEIR RESPECTIVE RELATED BODIES CORPORATE) GUARANTEES THE PAYMENT OR REPAYMENT OF ANY MONEYS OWING TO THE NOTEHOLDERS OR THE RETURN OF ANY PRINCIPAL INVESTED OR ANY PARTICULAR RATE OF RETURN, OR MAKES ANY STATEMENT (INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION) WITH RESPECT TO INCOME TAX OR OTHER TAXATION CONSEQUENCES OF ANY INVESTMENT WHICH IS MADE UNDER THIS INFORMATION MEMORANDUM.
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DIRECTORY
ISSUER TRUSTEE
Perpetual Limited ABN 86 000 431 827
in its capacity as trustee of PUMA Series 2014-2
Level 12, Angel Place, 123 Pitt Street
Sydney, NSW 2000
Tel: (02) 9229 9000
Fax: (02) 8256 1424
SECURITY TRUSTEE
Perpetual Trustee Company Limited ABN 42 000 001 007
Level 12, Angel Place, 123 Pitt Street
Sydney, NSW 2000
Tel: (02) 9229 9000
Fax: (02) 8256 1424
MANAGER
Macquarie Securitisation Limited ABN 16 003 297 336
Level 6, 1 Martin Place
Sydney, NSW 2000
Tel: (02) 8232 3481
Fax: (02) 8232 5366
ARRANGER AND JOINT LEAD MANAGER
Macquarie Bank Limited ABN 46 008 583 542
Level 6, 1 Martin Place
Sydney, NSW 2000
Tel: (02) 8232 3481
Fax: (02) 8232 5366
JOINT LEAD MANAGER
Australia and New Zealand Banking Group Limited ABN 11 005 357 522
ANZ Tower, 242 Pitt Street
Sydney NSW 2000
Tel: (02) 8037 0200
Fax: (02) 8937 7111
JOINT LEAD MANAGER
J.P. Morgan Australia Limited ABN 52 002 888 011
Level 18, J.P. Morgan House, 85 Castlereagh Street
Sydney NSW 2000
Tel: (02) 9003 8888
Fax: (02) 9003 8170
JOINT LEAD MANAGER
National Australia Bank Limited ABN 12 004 044 937
Level 26, 255 George Street
Sydney NSW 2000
Tel: (02) 9237 1122
REGISTER SOLICITORS TO THE MANAGER
C/- Perpetual Limited Allen & Overy
Level 12, Angel Place, 123 Pitt Street Level 25, 85 Castlereagh Street
Sydney, NSW 2000 Sydney, NSW 2000
Tel: (02) 9229 9000 Tel: (02) 9373 7700
Fax: (02) 8256 1424 Fax: (02) 9373 7710
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CONTENTS
IMPORTANT NOTICE .................................................................................................................................. 7
SUMMARY ..................................................................................................................................................... 14
Parties to the Transaction .................................................................................................................... 14 Structural Diagram .............................................................................................................................. 15 Summary of the Notes ......................................................................................................................... 16 Establishment of the Trust ................................................................................................................... 21 Notes .................................................................................................................................................... 21 The Housing Loans ............................................................................................................................. 21 The Housing Loan Pool ....................................................................................................................... 21 Security for the Notes .......................................................................................................................... 22 Payments on the Notes limited to Assets of the Trust ......................................................................... 22 Sale of Housing Loans ........................................................................................................................ 22 Credit Enhancements ........................................................................................................................... 22 Liquidity Enhancements ...................................................................................................................... 24 Liquidity Reserve ................................................................................................................................ 24 Extraordinary Expenses Reserve ......................................................................................................... 25 Redraws, Senior Further Advances and Subordinate Further Advances ............................................. 25 Funding of Redraws ............................................................................................................................ 26 Hedging Arrangements ........................................................................................................................ 26 Collections ........................................................................................................................................... 26 Interest on the Notes ............................................................................................................................ 27 Principal on the Notes ......................................................................................................................... 27 Optional Redemption .......................................................................................................................... 28 Withholding Tax and TFNs ................................................................................................................. 29 Transfer ............................................................................................................................................... 30 Austraclear .......................................................................................................................................... 30 Stamp Duty .......................................................................................................................................... 30 Ratings of the Notes ............................................................................................................................ 30 Investment Risks ................................................................................................................................. 30
EUROPEAN UNION RISK RETENTION REQUIREMENTS ................................................................ 31
RISK FACTORS ............................................................................................................................................ 33
THE ISSUER TRUSTEE, MACQUARIE BANK LIMITED AND THE MANAGER ........................... 57
The Issuer Trustee ............................................................................................................................... 57 Macquarie Bank Limited ..................................................................................................................... 57 The Manager........................................................................................................................................ 57
DESCRIPTION OF THE TRUST ................................................................................................................ 58
PUMA Program ................................................................................................................................... 58 The Trust ............................................................................................................................................. 58
DESCRIPTION OF THE ASSETS OF THE TRUST ................................................................................ 59
Assets of the Trust ............................................................................................................................... 59 The Housing Loans ............................................................................................................................. 59
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The Housing Loan Pool ....................................................................................................................... 60 Acquisition of Housing Loans on the Closing Date ............................................................................ 61 Acquisition of Housing Loans after the Closing Date ......................................................................... 61 Redraws, Senior Further Advances and Subordinate Further Advances ............................................. 62 Sale of Housing Loans ........................................................................................................................ 63 Eligible Mortgage Loan ....................................................................................................................... 63 Representations and Warranties .......................................................................................................... 64 Breach of Representations and Warranties .......................................................................................... 65 Certification of Housing Loans ........................................................................................................... 65 Other Features of the Housing Loans .................................................................................................. 66 Consumer Credit Code and National Credit Code .............................................................................. 67 General Insurance ................................................................................................................................ 67 Other Assets of the Trust ..................................................................................................................... 68
PUMA RESIDENTIAL LOAN PROGRAM ............................................................................................... 70
Origination and Management of Housing Loans ................................................................................ 70 Approval and Underwriting Process ................................................................................................... 71 PUMA's Product Types ....................................................................................................................... 71 Other Features of the Housing Loans .................................................................................................. 72 Origination, Settlement and Management of Housing Loans Under Constant Review by the Manager ............................................................................................................................................... 75 Servicing of the Housing Loans .......................................................................................................... 75 Collection and Enforcement Procedures ............................................................................................. 75
THE MORTGAGE INSURANCE POLICIES ............................................................................................ 77
General ................................................................................................................................................ 77 Description of the Mortgage Insurers .................................................................................................. 77 Primary Cover ..................................................................................................................................... 78 Delegated Underwriting Authority ...................................................................................................... 78 Reductions ........................................................................................................................................... 78 Exclusions ........................................................................................................................................... 80
DESCRIPTION OF THE NOTES ................................................................................................................ 82
Issuance of Notes ................................................................................................................................. 82 Interest on the Notes ............................................................................................................................ 85 Redemption of the Notes ..................................................................................................................... 86 Governing Law .................................................................................................................................... 88
DESCRIPTION OF THE CASHFLOWS OF THE TRUST ...................................................................... 89
Principles Underlying the Cashflows .................................................................................................. 89 Key Dates and Periods ........................................................................................................................ 89 Determination of the Available Income Amount ................................................................................ 90 Payments of accrued interest to disposing PUMA trust ...................................................................... 92 Distribution of the Available Income Amount .................................................................................... 93 Liquidity Reserve ................................................................................................................................ 95 Extraordinary Expenses Reserve ......................................................................................................... 96 Determination of Available Principal Amount .................................................................................... 96 Distribution of the Available Principal Amount ................................................................................. 96 Charge-Offs ......................................................................................................................................... 97
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DESCRIPTION OF THE TRANSACTION DOCUMENTS AND PARTIES ......................................... 99
The Trust Deed and the Management Deed ........................................................................................ 99 Auditing of Accounts and Net Income .............................................................................................. 104 Limits on Rights of Noteholders ....................................................................................................... 104 Termination of the Trust .................................................................................................................... 105 Sub-Fund Notice................................................................................................................................ 105 Amendments to the Trust Deed and Sub-Fund Notice ...................................................................... 105 The Security Trust Deed .................................................................................................................... 106 Interest Rate Swaps ........................................................................................................................... 115 The Redraw Facility .......................................................................................................................... 118 Changes to Transaction Documents .................................................................................................. 121
TAXATION – AUSTRALIAN TAX CONSEQUENCES ......................................................................... 123
Payments of Interest .......................................................................................................................... 123 Double Tax Treaties .......................................................................................................................... 124 Goods and Services Tax .................................................................................................................... 126 Other Taxes ....................................................................................................................................... 128
TAXATION – FOREIGN ACCOUNT TAX COMPLIANCE ACT ....................................................... 129
RATINGS OF THE NOTES ....................................................................................................................... 131
SELLING RESTRICTIONS ....................................................................................................................... 132
Australian Selling Restrictions .......................................................................................................... 132 U.S. Selling Restrictions ................................................................................................................... 132 General Selling Restrictions .............................................................................................................. 133
ANNOUNCEMENT ..................................................................................................................................... 134
TRANSACTION DOCUMENTS AVAILABLE FOR INSPECTION .................................................... 135
GLOSSARY .................................................................................................................................................. 136
ANNEXURE 1 – DETAILS OF THE HOUSING LOAN POOL ............................................................ 153
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IMPORTANT NOTICE
Terms
The various documents referred to in this Information Memorandum are described in the section entitled "Transaction Documents available for Inspection". Unless defined elsewhere, all other terms are defined in the Glossary. The Glossary should be referred to in conjunction with any review of this Information Memorandum.
Purpose
The sole purpose of this Information Memorandum is to assist the recipient to decide whether to proceed with a further investigation regarding whether it should invest in the Class A Notes (the Offered Notes and together with the Class B1 Notes and the Class B2 Notes, the Initial Notes). The Information Memorandum is not relevant for any other purpose. Without limiting the foregoing, nothing in this Information Memorandum constitutes an offer for, or is intended for use for any purpose relating to, and the Joint Lead Managers are not acting as joint lead managers in respect of:
the Class B1 Notes or the Class B2 Notes; or
the Class A-R Notes or the Class B1-R Notes (the Refinancing Notes and together with the Initial Notes, the Notes).
When used in this Information Memorandum the references to "Offered Noteholders", "Initial Noteholders" and "Noteholders" will be construed in accordance with the definitions set out above.
The Information Memorandum contains only a summary of the terms and conditions of the Offered Notes and does not purport to contain all the information a person considering investing in the Offered Notes may require. The terms and conditions of the Offered Notes are contained in the Transaction Documents. If there is any inconsistency between this Information Memorandum and the Transaction Documents, the Transaction Documents should be regarded as containing the definitive information. A copy of the Transaction Documents may be viewed as described under the heading "Transaction Documents available for Inspection" below.
Limited Responsibility for Information
The Manager has prepared this Information Memorandum based on information available and facts and circumstances known to it at the time the Information Memorandum is prepared (the Preparation Date). The Manager has requested and authorised the distribution of this Information Memorandum and has sole responsibility for its accuracy except for the sections specified in the following paragraph which have been confirmed as accurate by the Issuer Trustee and Macquarie Bank Limited, respectively.
The only role of the Issuer Trustee and Macquarie Bank Limited in the preparation of this Information Memorandum has been to confirm to the Manager as accurate in all material respects as at the Preparation Date the information contained in the sections listed below in respect of itself being, in respect of the Issuer Trustee, the information contained in the section entitled "The Issuer Trustee, Macquarie Bank Limited and the Manager—The Issuer Trustee" below and in respect of Macquarie Bank Limited, the information contained in the sections entitled "The Issuer Trustee, Macquarie Bank Limited and the Manager—Macquarie Bank Limited", "Summary—European Union Risk Retention Requirements", "European Union Risk Retention Requirements" and "Risk Factors—Regulatory initiatives may result in increased regulatory capital requirements and/or decreased liquidity in respect of the Notes" below. Except as described in this paragraph, none of the Issuer Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Joint Lead Managers or their respective related bodies corporate, the Interest Rate Swap
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Provider or the Security Trustee was involved in the preparation of any part of this Information Memorandum.
Except as described in the preceding paragraph, none of the Issuer Trustee, the Security Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Interest Rate Swap Provider, the Arranger or the Joint Lead Managers or their respective related bodies corporate have authorised or caused the issue of, or make any statement in, any part of this Information Memorandum and each of the Arranger, the Joint Lead Managers and their respective related bodies corporate, the Issuer Trustee, the Security Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One and the Interest Rate Swap Provider expressly disclaims, and takes no responsibility for any part of, this Information Memorandum.
Whilst the Manager believes the statements made in this Information Memorandum are accurate, neither it nor the Issuer Trustee, the Security Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Interest Rate Swap Provider, the Arranger, the Joint Lead Managers and their respective related bodies corporate, nor any external adviser to any of the foregoing, makes any representation or warranty, express or implied, as to, nor assumes any responsibility or liability for, the authenticity, origin, validity, accuracy or completeness of, or any errors or omissions in, any information, statement, opinion or forecast contained in this Information Memorandum or in any previous, accompanying or subsequent material or presentation.
Each of the Joint Lead Managers and their respective related bodies corporate act either solely through a separate division or as a separate legal entity in the context of this Information Memorandum and the Notes, without reference to any of its or its subsidiaries' respective personnel or operations outside that division, and are therefore not to be taken to be aware of any matters within the knowledge of such personnel or operations relating to the Issuer Trustee, the Manager or the issue of the Notes.
Date and Currency of Information
This Information Memorandum has been prepared based on information available and facts and circumstances known to the Manager as at the Preparation Date.
The delivery of this Information Memorandum, or any offer or issue of Offered Notes, at any time after the Preparation Date does not imply, nor should it be relied upon as a representation or warranty, that:
there has been no change since the Preparation Date in the affairs or financial condition of the Trust, the Issuer Trustee, Macquarie Bank Limited, the Manager or any other party named in this Information Memorandum; or
the information contained in this Information Memorandum is correct at such later time.
None of the Manager, the Arranger, the Joint Lead Managers or their respective related bodies corporate, the Interest Rate Swap Provider nor any other person accepts any responsibility to Noteholders or prospective Noteholders to update this Information Memorandum after the Preparation Date with regard to information or circumstances which come to its attention after the Preparation Date.
Independent Investment Decisions
This Information Memorandum is not intended to be, and does not constitute, a recommendation by the Manager, the Arranger, the Joint Lead Managers or their respective related bodies corporate, the Interest Rate Swap Provider or any other person that any person subscribe for or purchase any Notes. Accordingly, any person contemplating the subscription or purchase of the Offered Notes must:
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make their own independent investigation of the terms of the Offered Notes and the financial condition, affairs and creditworthiness of the Trust, after taking all appropriate advice from qualified professional persons; and
base any investment decision on the investigation and advice referred to in the bullet point above and not on this Information Memorandum.
No person is authorised to give any information or to make any representation which is not contained in this Information Memorandum and any information or representation not contained in this Information Memorandum must not be relied upon as having been authorised by or on behalf of the Arranger, the Joint Lead Managers or their respective related bodies corporate, the Manager, the Interest Rate Swap Provider or any other person.
Distribution to Professional Investors Only
This Information Memorandum has been prepared on a confidential basis for distribution only to professional investors whose ordinary business includes the buying or selling of securities such as the Offered Notes. This Information Memorandum is not intended for, should not be distributed to, and should not be construed as an offer or invitation to, any other person.
No Public Offer in Australia
This Information Memorandum is not a "Prospectus", an "Offer Information Statement" or a "Product Disclosure Statement" for the purposes of Chapter 7 of the Corporations Act and is not required to be lodged with the Australian Securities and Investments Commission (ASIC) under the Corporations Act as each offer for the issue of, any invitation to apply for the issue of, any offer for sale of, any invitation for offers to purchase, the Offered Notes to a person under this Information Memorandum: (a) (i) will be for a minimum amount payable on acceptance of the offer or application (as the case may be) of at least A$500,000 (calculated in accordance with section 708(9) of the Corporations Act and Regulation 7.1.18 of the Corporations Regulations 2001 (Cth) (the Corporations Regulations) (or its equivalent in other currencies, disregarding moneys lent by the offeror or its associates), or ((ii) does not otherwise require disclosure to a person under Part 6D.2 of the Corporations Act; (b)is not made to a person who is a Retail Client; and (c) does not require any document to be lodged with ASIC and complies with all applicable laws, regulations and directives. Accordingly, this Information Memorandum is not required to be lodged with ASIC as a disclosure document under Part 6D.2 of the Corporations Act.
No acquisition by Offshore Associates
The Class A Notes are intended to be offered in a manner that complies with the requirements of the "public offer" exemption from interest withholding tax in section 128F of the ITAA 1936 (refer to the heading "Taxation—Australian Tax Consequences" for more information). This exemption will be failed if it is known or reasonably suspected that the Class A Notes or an interest in them will be acquired directly or indirectly by any Offshore Associates of the Issuer Trustee or the Manager (which would include certain associates of Macquarie Group), other than in the capacity of dealer, manager or underwriter in relation to the placement of the Offered Notes, or in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered scheme.
As a result, Offshore Associates of the Issuer Trustee or the Manager should not acquire any Class A Notes or an interest in them.
Offer Must Comply with Laws
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No action has been taken or will be taken which would permit a public offering of the Offered Notes, or possession or distribution of this Information Memorandum, in any country or jurisdiction where action for that purpose is required.
A person may not (directly or indirectly) offer for issue or sale, or make any invitation to apply for the issue or purchase of, the Offered Notes, nor distribute this Information Memorandum, unless:
the aggregate consideration payable by each offeree or invitee is at least A$500,000 (calculated in accordance with section 708(9) of the Corporations Act and Regulation 7.1.18 of the Corporations Regulations) (or its equivalent in other currencies, disregarding moneys lent by the offeror or its associates) or the offer or invitation does not need disclosure to investors under Part 6D.2 of the Corporations Act;
such offer or invitation is not made to a Retail Client; and
such action does not require any document to be lodged with ASIC and complies with all applicable laws, regulations and directives.
Distribution by Macquarie Bank Limited
This information is intended solely for the use of wholesale clients as defined under the Corporations Act.
This information is distributed in Hong Kong by Macquarie Capital Securities Limited (MCSL) and is intended solely for "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance for the purpose of providing preliminary information and does not constitute any offer to the public within the meaning of the Companies Ordinance (Cap.32) of Hong Kong. Macquarie Bank Limited has been granted a banking licence by the Hong Kong Monetary Authority under the Banking Ordinance (Cap. 155) of Hong Kong with effect from 24 August 2011 but is yet to commence carrying on banking business in Hong Kong. The contents of this Information Memorandum have not been reviewed by any regulatory authority in Hong Kong. MCSL is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). Its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (Macquarie) and Macquarie does not guarantee or otherwise provide assurance in respect of the obligations of MCSL, unless noted otherwise.
This information is made available in Japan by Macquarie Capital Securities (Japan) Limited (MCSJL, (Financial Instruments Firm. Kanto Financial Bureau (Kin-Sho) No. 231 (Member of Japan Securities Dealers Association and The Financial Futures Association of Japan)) and is intended solely for "Qualified Institutional Investors" and "Joint Stock Companies" with capital of 1 billion yen or more within the meaning of the Financial Instruments and Exchange Law. No part of the information provided herein is to be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.
This information is distributed in Singapore by Macquarie Bank Limited Singapore Branch (MBL Singapore) and has not been registered as a prospectus with the Monetary Authority of Singapore. This information and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the financial instruments referred to in this document may not be circulated or distributed, nor may the financial instruments be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the SFA)) under Section 274 of the SFA, (ii) to an accredited investor (as defined under Section 4A of the SFA) under Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA. MBL Singapore holds a licence under the Banking Act, Chapter 19 of Singapore to transact banking business in Singapore and therefore is subject to
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the supervision of the Monetary Authority of Singapore in respect thereof. As a holder of a banking licence in Singapore, MBL Singapore is exempted from the requirement to hold a Capital Markets Services Licence, Financial Adviser’s Licence, Commodity Broker’s Licence or a Commodity Trading Adviser Licence in Singapore and is permitted to carry on activities regulated under the Securities and Futures Act (Chapter 289), Financial Advisers Act (Chapter 110) and the Commodity Trading Act (Chapter 48A).
This information is distributed in the UK by Macquarie Bank Limited, London Branch (MBLLB) and in the EEA member states (other than the UK) by Macquarie Bank International Limited (MBIL) where required. This information is directed only at, qualified investors (i) who have professional experience in matters relating to investments who fall within the definition of "investment professional" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Order), or (ii) who are high net worth companies, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Order, and (iii) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons). Any investment or investment activity to which this announcement relates is available only to and will only be engaged in with relevant persons. Under no circumstances should persons act or rely upon the contents of this announcement (i) in the United Kingdom, by persons who are not relevant persons and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not qualified investors. MBLLB is registered in England and Wales (Branch No: BR002678, Company No: FC018220, Firm Reference No: 170934). MBIL is incorporated and registered in England and Wales (Company No. 06309906, Firm Reference No. 471080). The registered office for MBLLB and MBIL is Ropemaker Place, 28 Ropemaker Street, London, EC2Y 9HD. MBLLB is authorised and regulated by the Australian Prudential Regulation Authority. Authorised by the Prudential Regulation Authority and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. MBIL is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
This information is distributed in New Zealand by Macquarie. Neither Macquarie nor any member of the Macquarie Group, or any of its worldwide related bodies corporate, are registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act 1989.
Other than Macquarie, any Macquarie entity noted in this document is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). That entity’s obligations do not represent deposits or other liabilities of Macquarie. Macquarie does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise.
Investments in the Trust are not liabilities of Macquarie Bank Limited or the Joint Lead Managers
Investments in the Trust are not deposits with or other liabilities of Macquarie Bank Limited or any member of Macquarie Group or the Joint Lead Managers or their respective related bodies corporate and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. None of Macquarie Bank Limited or any member of Macquarie Group or the Joint Lead Managers or their respective related bodies corporate guarantees the performance of the Trust or the repayment of capital from the Trust, the repayment of principal on the Notes, the payment of interest on the Notes or any particular rate of return. Other than Macquarie Bank Limited, no Macquarie Group entity noted in this Information Memorandum is an authorised deposit-taking institution for the purposes of the Banking Act (Cth) 1959. The obligations of any Macquarie Group entity noted in this Information Memorandum do not represent deposits or other liabilities of Macquarie Bank Limited. Neither Macquarie Bank Limited nor any other member of Macquarie Group guarantees or otherwise provides assurance in respect of the obligations of any of these entities, unless noted otherwise.
U.S. Selling Restrictions
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The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, US persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.
Disclosure of Interests
Each of Macquarie Securitisation Limited, Macquarie Bank Limited, Macquarie Group and the Joint Lead Managers and their respective subsidiaries, directors, officers and employees:
may have a pecuniary or other interest in the Notes; and
may receive fees, brokerage and commissions from the proceeds of, and may act as principal in any dealings in, the Notes.
These interests and dealings may adversely affect the price of the Notes.
No such person will be required to retain any Notes acquired by it and any such person may realise a gain by selling Notes acquired by it in the secondary market.
Each of the Arranger and each Joint Lead Manager (the Transaction Parties) discloses that, in addition to the arrangements and interests it will or may have with respect to the Arranger and Manager, the Security Trustee and Perpetual Limited in its capacity as trustee of the Trust or any other trusts (together, the Group), as described in this Information Memorandum (the Transaction Document Interests) it, its Related Entities, directors, officers and employees:
(a) may from time to time, be a Noteholder or have other interests with respect to the Notes and they may also have interests relating to other arrangements with respect to a Noteholder or a Note; and
(b) may receive fees, brokerage and commissions or other benefits, and act as principal with respect to any dealing with respect to any Notes,
(the Note Interests).
Each purchaser of Notes acknowledges these disclosures and further acknowledges and agrees that:
(a) each of the Transaction Parties and each of their respective Related Entities and their respective directors, officers and employees (each a Relevant Entity) will or may have the Transaction Document Interests and may from time to time have the Note Interests and is, and from time to time may be, involved in a broad range of transactions including, without limitation, banking, dealing in financial products, credit, derivative and liquidity transactions, investment management, corporate and investment banking and research (the Other Transactions) in various capacities in respect of any member of the Group or any other person, both on the Relevant Entity’s own account and/or for the account of other persons (the Other Transaction Interests); and
(b) each Relevant Entity in the course of its business (whether with respect to the Transaction Document Interests, the Note Interests, the Other Transaction Interests or otherwise) may act independently of any other Relevant Entity; and
(c) to the maximum extent permitted by applicable law, the duties of each Relevant Entity in respect of any member of the Group and the Notes are limited to the contractual obligations of the Relevant Entities to the relevant members of the Group as set out in the relevant Transaction Documents and, in particular, no advisory or fiduciary duty is owed to any person; and
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(d) a Relevant Entity may have or come into possession of information not contained in this Information Memorandum that may be relevant to any decision by a potential investor to acquire the Notes and which may or may not be publicly available to potential investors (Relevant Information); and
(e) to the maximum extent permitted by applicable law, no Relevant Entity is under any obligation to disclose any Relevant Information to any member of the Group or to any potential investor and this Information Memorandum and any subsequent course of conduct by a Relevant Entity should not be construed as implying that the Relevant Entity is not in possession of such Relevant Information; and
(f) each Relevant Entity may have various potential and actual conflicts of interest arising in the course of its business including in respect of the Transaction Document Interests, the Note Interests or the Other Transaction Interests. For example, the exercise of rights against a member of the Group arising from the Transaction Document Interests (for example by a provider of a Support Facility) or from an Other Transaction may affect the ability of the Group member to perform its obligations in respect of the Notes. In addition, the existence of the Transaction Document Interests or Other Transaction Interests may affect how a Relevant Entity as a Noteholder may seek to exercise any rights it may have as a Noteholder (such as the exercise of voting rights). These interests may conflict with the interests of the Group or a Noteholder and the Group or a Noteholder may suffer loss as a result. To the maximum extent permitted by applicable law, a Relevant Entity is not restricted from entering into, performing or enforcing its rights in respect of the Transaction Document Interests, the Note Interests or the Other Transaction Interests and may otherwise continue to take steps to further or protect any of those interests and its business even where to do so may be in conflict with the interests of Noteholders or the Group and the Relevant Entities may in so doing act without notice to, and without regard to, the interests of any such person.
Limited Recovery
Any obligation or liability of the Issuer Trustee arising under or in any way connected with the Notes, the Trust Deed or any other Transaction Document to which the Issuer Trustee is a party is limited, except in the case of fraud, negligence or wilful default on its part, to the extent to which it can be satisfied out of the assets of the Trust out of which the Issuer Trustee is actually indemnified for the obligation or liability. Other than in the exception previously mentioned, the assets of the Issuer Trustee, the Security Trustee or any other member of the Perpetual Trustee group are not available to meet payments of interest or repayments of principal on the Notes. The Issuer Trustee does not guarantee the success of the Trust nor the repayment of capital or any particular rate of capital or income return.
References to Ratings
There are various references in this Information Memorandum to the credit rating of the Initial Notes and of particular parties. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the relevant rating agency. In addition, the provisional ratings of the Initial Notes do not address the expected timing of principal repayments under the Initial Notes. Other than this paragraph and providing the ratings of the Initial Notes (as disclosed on page 30 and elsewhere in this Information Memorandum), none of the rating agencies have been involved in the preparation of this Information Memorandum. F
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SUMMARY
This summary highlights selected information from this document. All of the information contained in this summary is qualified by the more detailed explanations in other parts of this Information Memorandum.
Parties to the Transaction
Trust ......................................................................... PUMA Series 2014-2
Issuer Trustee .......................................................... Perpetual Limited, in its capacity as trustee of the Trust
Manager ................................................................... Macquarie Securitisation Limited
Security Trustee ....................................................... Perpetual Trustee Company Limited
Income Unitholder ................................................... Macquarie Bank Limited
Capital Unitholder ................................................... Macquarie Bank Limited
Arranger ................................................................... Macquarie Bank Limited
Joint Lead Managers ............................................... Macquarie Bank Limited, Australia and New Zealand Banking Group Limited, J.P. Morgan Australia Limited and National Australia Bank Limited
Redraw Facility Provider........................................ Macquarie Bank Limited
Mortgage Insurers ................................................... Genworth Financial Mortgage Insurance Pty Limited (ABN 60 106 974 305)
QBE Lenders' Mortgage Insurance Limited (ABN 70 000 511 071)
Interest Rate Swap Provider .................................. Macquarie Bank Limited
Rating Agencies ....................................................... Fitch Australia Pty Ltd
Standard & Poor’s (Australia) Pty Limited
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Structural Diagram
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Summary of the Notes
On 16 July 2014 (the Closing Date), the Manager will direct the Issuer Trustee to issue the Initial Notes.
For the purpose of refinancing the Initial Notes (other than the Class B2 Notes), the Manager may (but is not obliged to) market the Refinancing Notes to be issued as set out below in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
All Notes will be limited recourse obligations of the Issuer Trustee collateralised by the same pool of housing loans and other Authorised Investments. Unless otherwise specified, payments and priorities are described in relation to Noteholders' rights prior to any enforcement under the security trust deed.
Terms of the Initial Notes
Class A Notes Class B1 Notes Class B2 Notes
Aggregate Initial Invested Amount
A$920,000,000 A$60,000,000 A$20,000,000
Anticipated Ratings: Fitch AAAsf Not rated Not rated S&P AAA (sf) AAA (sf) Not rated
Closing Date 16 July 2014.
Pricing Date 3 July 2014.
Interest on Class A Notes, Class B1 Notes and Class B2 Notes
The Class A Notes, the Class B1 Notes and the Class B2 Notes are floating rate Notes bearing floating rate interest payable monthly in arrears on the Monthly Payment Dates in each year calculated as described under "Description of the Notes—Interest on the Notes—Class A Notes, Class B1 Notes and Class B2 Notes".
The interest rates for a Monthly Period for any Class A Notes, any Class B1 Notes and any Class B2 Notes will be equal to the one month Bank Bill Rate for that Monthly Period plus the relevant margin applicable to those Notes determined by the Manager on the Pricing Date. The Margin for the Class A Notes and the Class B1 Notes will increase by 0.50% p.a. from and including the Scheduled Maturity Date.
The Initial Notes will be issued without accrued interest. The first interest payment on these Initial Notes will relate to the period between the Closing Date and the first Monthly Payment Date. Accordingly, the first Monthly Period will be greater than one month and the Bank Bill Rate applicable to the first interest payment will be the rate determined by the Manager on the Closing Date by straight line interpolation between (i) the Bank Bill Rate on that date for the period next shorter than the length of that first Monthly Period and (ii) the Bank Bill Rate on that date for the period next longer than the length of that first Monthly Period.
Monthly Payment Dates The 18th day or, if the 18th day is not a Business Day, then the next Business Day, of each calendar month beginning on 18 August 2014.
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Issue Price Each Note will be issued at par value.
Redraw Facility Limit On the Closing Date, the Redraw Facility Limit will be 0.25% of the Total Initial Invested Amount of all Notes on the Closing Date.
Business Day Sydney and Melbourne.
Clearance/Settlement Austraclear – Class A Notes, Class B1 Notes and Class B2 Notes.
Subject to the rules of the relevant clearing and settlement system, Initial Noteholders may elect to hold interests in Initial Notes (i) directly through the Austraclear System, (ii) indirectly through Euroclear or Clearstream, Luxembourg if they are participants in such systems or (iii) indirectly through organisations which are participants in the Austraclear System, Euroclear or Clearstream, Luxembourg.
Listing The Manager may in its absolute discretion, at any time on or after the Closing Date, make an application for the Notes of any Class to be listed on the Australian Securities Exchange (ASX). If any such application is made, it is wholly at the discretion of the ASX whether to accept the application to list the relevant Class of Notes. Any such listing is subject to the ASX Listing Rules and the ASX Market Rules and may be subject to any other conditions imposed by the ASX.
RBA repo eligibility The Manager has undertaken to make an application to the Reserve Bank of Australia (RBA) for the purposes of ensuring that the Class A Notes and the Class B1 Notes are accepted as "eligible securities" which may be lodged as collateral in relation to a repurchase agreement entered into with the RBA and, if that application is successful, to take such other action that the Manager may determine is commercially reasonable and in line with current market practice to maintain the "eligible securities" status of the Class A Notes or the Class B1 Notes (as applicable).
European Union Risk Retention Requirements
Macquarie Bank Limited, through special purpose vehicles known as PUMA Sub-Fund B1 and/or Mac Fund One (which are both wholly owned and financed by Macquarie Bank Limited and of which Perpetual Limited is trustee), will retain a material net economic interest of not less than five per cent in the securitisation as an “originator” in accordance with the text of each of Article 405 of Regulation (EU) No 575/2013 (the Capital Requirements Regulation) and Article 51 of Regulation (EU) No 231/2013 (the AIFM Regulation) (which, in each case, does not take into account any corresponding national measures or other measures made in any EEA state) and publicly disclose the manner in which such interest is held. As at the Closing Date, such interest will be comprised of certain randomly selected exposures held by Macquarie Bank Limited, through PUMA Sub-Fund B1 and/or Mac Fund One,, as required by the text of each of Article 405 and Article 51. Macquarie Bank Limited’s on-going retention of the net economic interest described above will be confirmed in the monthly investor reports and any change to the manner in which such interest is held will be notified to Noteholders.
For a more detailed description, see the heading "European Union Risk Retention Requirements".
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Denomination Each Note has a denomination of A$10,000. The Notes will initially be issued in minimum parcels of at least A$500,000.
Final Maturity Date The Monthly Payment Date falling in October 2045.
Repayment of Principal on the Notes
Prior to enforcement of the security granted under the Security Trust Deed, the available principal on a Monthly Payment Date will be allocated:
first, pari passu and rateably:
if any Class A Notes remain outstanding, to the Class A Noteholders towards repayment of principal of the Class A Notes on a pari passu and rateable basis until the Stated Amount of the Class A Notes is reduced to zero; and
if any Class A-R Notes remain outstanding, to the Class A-R Noteholders towards repayment of principal of the Class A-R Notes on a pari passu and rateable basis until the Stated Amount of the Class A-R Notes is reduced to zero;
second, pari passu and rateably:
if any Class B1 Notes remain outstanding, to the Class B1 Noteholders towards repayment of principal of the Class B1 Notes on a pari passu and rateable basis until the Stated Amount of the Class B1 Notes is reduced to zero; and
if any Class B1-R Notes remain outstanding, to the Class B1-R Noteholders towards repayment of principal of the Class B1-R Notes on a pari passu and rateable basis until the Stated Amount of the Class B1-R Notes is reduced to zero; and
third, to the Class B2 Noteholders towards repayment of principal of the Class B2 Notes on a pari passu and rateable basis until the Stated Amount of the Class B2 Notes is reduced to zero.
Despite being ranked pari passu in respect of the repayment of principal, Class A Notes and Class A-R Notes can only ever both be outstanding at the same time on the date of issue of the Class A-R Notes, between the time when the Class A-R Notes are issued and the time when the proceeds of that issuance is used to fully redeem the Class A Notes as described more fully in the section entitled "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date". Similarly, Class B1 Notes and Class B1-R Notes can only ever both be outstanding at the same time on the date of issue of the Class B1-R Notes, between the time when the Class B1-R Notes are issued and the time when the proceeds of that issuance is used to fully redeem the Class B1 Notes as described more fully in the section entitled "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
For a more detailed description, see the section entitled "Description of the Cashflows of the Trust—Distribution of the Available Principal Amount".
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Scheduled Maturity Date (in relation to the Class A Notes and the Class B1 Notes only)
The Monthly Payment Date falling in July 2019.
Call Date The Call Date is the Monthly Payment Date in relation to which the Manager reasonably expects (on the day 10 Business Days prior to that Monthly Payment Date) that the aggregate of the Invested Amount of the Class A Notes, the Class A-R Notes, the Class B1 Notes, the Class B1-R Notes and the Class B2 Notes will, for the first time, be less than or equal to the Call Date Total Invested Amount.
Issuer Trustee’s call options in relation to the Notes
The Issuer Trustee will, if the Manager (at its option but subject to the limitation described below) directs it to do so, redeem all of the Class A Notes and/or all of the Class B1 Notes in full on any Monthly Payment Date occurring on or after the Scheduled Maturity Date by applying the proceeds of issue of any Refinancing Notes. In exercising this call option, the Manager may elect to have both the Class A Notes and the Class B1 Notes redeemed on the same Monthly Payment Date or to have the Class A Notes redeemed on a particular Monthly Payment Date and the Class B1 Notes redeemed on a subsequent Monthly Payment Date, however the Class B1 Notes may not be redeemed pursuant to this call option prior to the Class A Notes being redeemed.
The Issuer Trustee will, if the Manager (at its option but subject to the limitation described below) directs it to do so, redeem the Notes in full on any Monthly Payment Date occurring on or after the Call Date by applying the Collections available for that purpose on that Monthly Payment Date, including the proceeds of a sale of the Mortgage Loan Rights.
If the Issuer Trustee redeems the Notes upon exercise of one of the options described above, the relevant Noteholders will receive a payment equal to the outstanding Invested Amount of the Notes so redeemed plus accrued interest on the outstanding Invested Amount of those Notes.
The Issuer Trustee’s call options are explained further in the sections titled "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" and "Description of the Notes—Redemption of the Notes—Optional Redemption of all Notes on or after the Call Date".
Liquidity Reserve The Liquidity Reserve functions as liquidity for the Trust which may be applied by way of a Liquidity Reserve Draw towards income payments of the Trust on a Monthly Payment if the Available Income Amount (determined for this purpose as being exclusive of any Liquidity Reserve Draw on the relevant Monthly Payment Date) for that Monthly Payment Date is insufficient to meet the Total Expenses of the Trust on that Monthly Payment Date.
The Liquidity Reserve may also be applied on a day other than a Monthly Payment Date, to the extent that the Liquidity Reserve exceeds the Required Liquidity Reserve, to fund Redraws.
On the Closing Date, a portion of the proceeds of issue of the Notes (equal to the greater of 0.13% of the Total Invested Amount as at the Closing Date and 1.3%
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of the outstanding principal balance of all housing loans, or such other amount notified in writing by the Manager to the Issuer Trustee) (the Required Liquidity Reserve) will be retained by the Issuer Trustee as Liquidity Reserve.
The Liquidity Reserve is explained in further detail in the section entitled "Description of the Cashflows of the Trust — Liquidity Reserve".
Extraordinary Expenses Reserve
On the Closing Date, an amount of A$150,000 will be held as Extraordinary Expenses Reserve to be applied towards certain payments of the Trust, including out-of-pocket expenses incurred by the Issuer Trustee which are not incurred in the ordinary course of the Trust.
Threshold Rate On each Determination Date the Manager must determine the rate that is the minimum weighted average rate of interest on all housing loans which are assets of the Trust, in order to cover, together with all other income to be received by the Issuer Trustee, the Total Expenses of the Trust plus a margin of 0.25% (the Threshold Rate) and notify that rate to the Issuer Trustee on or prior to the next Monthly Payment Date.
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Establishment of the Trust
The PUMA Program was established pursuant to a Trust Deed dated 13 July 1990. The Trust Deed provides the general terms and structure for securitisation under the PUMA Program. A sub-fund notice from Macquarie Securitisation Limited, as the Manager of the PUMA Program, to the Issuer Trustee, sets out the specific details of the Trust. These details may vary from the terms set forth in the Trust Deed. Each securitisation under the program is a separate transaction with a separate trust (although some securitisations may have more than one issue of Notes). The assets of the Trust will not be available to pay the obligations of any other trust, and the assets of other trusts will not be available to pay the obligations of the Trust. See "Description of the Trust" below.
The beneficial interest in the Trust is held by Macquarie Bank Limited as the Income Unitholder and the Capital Unitholder. The income units may be transferred or sold by Macquarie Bank Limited to any other member of the Macquarie Group or to an entity unrelated to the Macquarie Group. The unitholders are only entitled to receive payments or distributions subject to prior ranking entitlements described under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" below.
Notes
The Initial Notes will be issued as Class A Notes, Class B1 Notes or Class B2 Notes. The Refinancing Notes may be issued as Class A-R Notes and/or Class B1-R Notes.
The Housing Loans
The Trust involves the securitisation of housing loans which were originated by appointed Originators in the name of Perpetual Limited, in its capacity as trustee of the PUMA Program. The housing loans are secured by mortgages on residential property located in Australia. The Manager is responsible for the day to day servicing of the housing loans. The Issuer Trustee will issue the Notes to fund the acquisition of the beneficial interest in the housing loans by the
Trust from other trusts within the PUMA Program.
The Housing Loan Pool
The housing loan pool for the Trust will comprise housing loans acquired from trusts within the PUMA Program utilising the proceeds of issue of Notes.
The housing loan pool will consist of fixed rate and/or variable rate residential housing loans secured by mortgages on owner occupied and non-owner occupied residential properties. The housing loans will have terms to stated maturity of no more than 30 years and 1 month. General information regarding the housing loans is contained in "Description of the Assets of the Trust—The Housing Loans" below. A summary of the characteristics of the housing loans expected to be held by the Trust as at the Closing Date is contained in Annexure 1.
The housing loan pool held by the Trust and the characteristics of that housing loan pool are expected to vary as a result of the following:
the early repayment or sale of housing loans;
the funding of Redraws; and
the making of Subordinate Further Advances,
by the Issuer Trustee as described under the headings "—Sale of Housing Loans" and "—Redraws, Senior Further Advances and Subordinate Further Advances" below.
The Issuer Trustee may make Subordinate Further Advances on housing loans included in the housing loan pool at any time. All Subordinate Further Advances may be funded only by way of subordinated drawings under the redraw facility.
The Issuer Trustee may also sell housing loans in limited circumstances. See "Description of the Assets of the Trust—Sale of Housing Loans". Any such sale of housing loans will affect the housing loan pool characteristics as described in Annexure 1.
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The Manager has selected, and will select, the housing loans based on its selection criteria. Any housing loans so selected must comply with the criteria described in "Description of the Assets of the Trust—The Housing Loans".
However, notwithstanding the foregoing and anything to the contrary in this Information Memorandum, the Manager must not direct the Issuer Trustee to, and the Issuer Trustee must not, acquire any housing loans (including in substitution or replacement for any housing loan sold in the circumstances contemplated above) after the Closing Date.
Security for the Notes
To secure the Trust's payment obligations to the Noteholders and its other Secured Creditors, all of the assets of the Trust will be subject to a security interest granted by the Issuer Trustee under the security trust deed in favour of Perpetual Trustee Company Limited, a separate Security Trustee, see "Description of the Transaction Documents and Parties—The Security Trust Deed". The Security Trustee’s role in the transaction will be to maintain the security over the assets of the Trust and to take steps to liquidate the assets of the Trust upon the occurrence of certain events of default, see "Description of the Transaction Documents and Parties—The Security Trust Deed—Events of Default" and "Description of the Transaction Documents and Parties—The Security Trust Deed—Enforcement of the Security".
Payments on the Notes limited to Assets of the Trust
Payments of interest and principal on the Notes will come only from the housing loans and other assets of the Trust. The assets of the parties to the transaction are not available to meet the payments of interest and principal on the Notes. If there are losses on the housing loans, the Trust may not have sufficient assets to repay the Notes.
Sale of Housing Loans
The Issuer Trustee, at the direction of the Manager, may sell housing loans at any time if:
the borrower under the housing loan requests to:
convert the housing loan from a floating to a fixed rate of interest; or
extend the period for which a fixed rate of interest applies to the housing loan,
which the Manager cannot agree to while the housing loan is held in the Trust;
the borrower under the housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request; and/or
the borrower under the housing loan requests a variation to the terms of the housing loan (including any request following an offer by the Manager) which the Manager cannot agree to while the housing loan is held in the Trust.
The Issuer Trustee will be paid the outstanding balance (plus any accrued interest and premium as determined by the Manager thereon) of any housing loan which is sold in the circumstances described above (subject to any adjustment for fixed rate loans sold without a corresponding interest rate swap).
The Manager is not required to direct the Issuer Trustee to sell any housing loans but the Manager may elect to so direct or not direct the Issuer Trustee in its absolute discretion.
Credit Enhancements
Payments of interest and principal on the Notes will be supported by the following forms of credit enhancement.
Subordination provided to the Class A Notes, the Class A-R Notes, the Class B1 Notes and the Class B1-R Notes by the Class B2 Notes
The Class B2 Notes will always be subordinated to the Class A Notes, the Class A-R Notes (if any), the Class B1 Notes and the Class B1-R Notes (if any) in their right to receive interest payments.
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Prior to and following the enforcement of the Security granted under the security trust deed, the Class B2 Notes will be fully subordinated to the Class A Notes, Class A-R Notes (if any), the Class B1 Notes and the Class B1-R Notes (if any) in their right to receive principal payments. That is, any Class A Notes, Class A-R Notes, Class B1 Notes and Class B1-R Notes on issue must be repaid in full before Class B2 Noteholders are entitled to receive any principal repayment on their Class B2 Notes.
The support provided to the Class A Notes, the Class A-R Notes, the Class B1 Notes and the Class B1-R Notes by the Class B2 Notes is intended to enhance the likelihood that the Class A Notes, the Class A-R Notes, the Class B1 Notes and the Class B1-R Notes will receive expected payments of interest and principal.
Subordination provided to the Class A Notes and the Class A-R Notes by the Class B1 Notes and the Class B1-R Notes
Subject to the second paragraph below, the Class B1 Notes and the Class B1-R Notes (if any) will always be subordinated to the Class A Notes and the Class A-R Notes (if any) in their right to receive interest payments.
Prior to and following the enforcement of the Security granted under the security trust deed and subject to the paragraph below, the Class B1 Notes and the Class B1-R Notes will be fully subordinated to the Class A Notes and the Class A-R Notes (if any) in their right to receive principal payments. That is, any Class A Notes and Class A-R Notes on issue must be repaid in full before Class B1 Noteholders or Class B1-R Noteholders are entitled to receive any principal repayment on their Class B1 Notes or Class B1-R Notes.
In the circumstance where the Class B1 Notes are refinanced by the issue of Refinancing Notes as further described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date", the Class B1 Notes will be repaid in full by applying the proceeds of the issue of the relevant Refinancing Notes and, as such, will repaid prior to repayment of the Class A-R Notes and the Class B1-R Notes.
Mortgage Insurance Policies
Mortgage insurance policies issued by Genworth Financial Mortgage Insurance Pty Limited or QBE Lenders’ Mortgage Insurance Limited will, except as noted below, provide full coverage for all principal due and, subject to certain limits, unpaid interest on the housing loans acquired by the Trust. For further details in relation to the mortgage insurers and a fuller description of the terms and limitations of the mortgage insurance policies see "The Mortgage Insurance Policies".
The mortgage insurance policies do not provide coverage in respect of Subordinate Further Advances, which are described below under the heading "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances".
Excess Available Income Amount
Any Available Income Amount remaining after payment of interest on the Class A Notes, the Class A-R Notes (if any), the Class B1 Notes and the Class B1-R Notes (if any) and the Trust's expenses on each Monthly Payment Date will be available (in priority to any application towards payment of interest on the Class B2 Notes on the relevant Monthly Payment Date) to cover any losses on the housing loans or on any other Authorised Investment which arise during the current accrual period or a prior accrual period and that are not, in the case of the housing loans, met under the mortgage insurance policies.
Charge-Offs
To the extent that there is a loss on a housing loan which is not satisfied by the application of the Available Income Amount, that amount will be allocated against the Stated Amount of the Notes as follows:
(a) first, to the Class B2 Notes. The amount of the loss will be allocated pari passu to the Class B2 Notes, reducing the Stated Amount of the Class B2 Notes until their Stated Amount is zero;
(b) second, to the extent that there are any amounts outstanding after the application of paragraph (a), pari passu and rateably to the Class B1 Notes and, if any, the
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Class B1-R Notes. The amount of the loss will be allocated pari passu and rateably:
to the Class B1 Notes, pari passu and rateably towards reducing the Stated Amount of the Class B1 Notes until their Stated Amount is zero; and
to the Class B1-R Notes (if any), pari passu and rateably towards reducing the Stated Amount of the Class B1-R Notes until their Stated Amount is zero;
(c) third, to the extent that there are any amounts outstanding after the application of paragraphs (a) and (b), pari passu and rateably to the Class A Notes and, if any, the Class A-R Notes. The amount of the loss will be allocated pari passu and rateably:
to the Class A Notes, pari passu and rateably towards reducing the Stated Amount of the Class A Notes until their Stated Amount is zero; and
to the Class A-R Notes (if any), pari passu and rateably towards reducing the Stated Amount of the Class A-R Notes until their Stated Amount is zero.
Accordingly, the Class A Noteholders and the Class A-R Noteholders will have the benefit of Charge-Offs against the Class B1 Notes, the Class B1-R Notes and the Class B2 Notes. The Class B1 Noteholders and the Class B1-R Noteholders will have the benefit of Charge-Offs against the Class B2 Notes.
Liquidity Enhancements
Application of Principal Collections and Liquidity Reserve towards Expenses
Prior to enforcement of the Security granted under the security trust deed, Available Income Amount will be applied on each Monthly Payment Date towards the expenses of the Trust, including interest on the Notes, as described under the heading "Description of the Cashflows of the
Trust—Distribution of the Available Income" below. If there is insufficient income held by the Trust on a Monthly Payment Date to meet the expenses of the Trust, Principal Collections on the pool of housing loans held by the Trust on that Monthly Payment Date will be applied to meet those expenses. Such amount is referred to as the Principal Draw.
The Issuer Trustee will hold a reserve, known as the Liquidity Reserve, which is invested in Authorised Investments other than housing loans. If the Available Income Amount (determined for this purpose as being exclusive of any Liquidity Reserve Draw on the relevant Monthly Payment Date) is insufficient to meet the expenses of the Trust, including interest on the Notes, the Liquidity Reserve will be applied by way of a Liquidity Reserve Draw towards those expenses. Further details of the operation of the Liquidity Reserve are given under the heading "Liquidity Reserve" below.
In addition, the Issuer Trustee must hold a reserve known as the Extraordinary Expenses Reserve. Further details of the operation of the Extraordinary Expenses Reserve are given under the heading "Extraordinary Expenses Reserve" below.
Liquidity Reserve
On the Closing Date, a portion from the proceeds of issue of the Notes (equal to the greater of 0.13% of the Total Invested Amount as at the Closing Date and 1.3% of the outstanding principal balance of all housing loans) will be held as Liquidity Reserve and invested in Authorised Investments other than housing loans.
The minimum amount required to be held as Liquidity Reserve from time to time is known as the Required Liquidity Reserve.
To the extent that the actual Liquidity Reserve on a Monthly Payment Date is less than the then Required Liquidity Reserve, the shortfall may be funded by any excess Available Income Amount available for this purpose. See "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
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Application of the Liquidity Reserve
The Liquidity Reserve may be used:
as liquidity for the Trust as described under the heading "—Liquidity Enhancements— Application of Available Principal Collections and Liquidity Reserve towards Expenses" above; or
where the actual amount of the Liquidity Reserve exceeds the Required Liquidity Reserve, to the extent of that excess:
to fund Redraws at any time; or
to repay the senior principal component of the redraw facility as described under the heading "Description of the Transaction Documents and Parties—The Redraw Facility—Repayment of Redraw Advances" below.
To the extent that there is an excess of the amount of the actual Liquidity Reserve over the amount of the then Required Liquidity Reserve, which has not been utilised on or prior to the relevant Monthly Payment Date, it will be passed through to Class A Noteholders, the Class A-R Noteholders, the Class B1 Noteholders, the Class B1-R Noteholders and/or the Class B2 Noteholders as a principal repayment on their Notes. See "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
Extraordinary Expenses Reserve
On the Closing Date, an amount of A$150,000 will be held as Extraordinary Expenses Reserve to be applied towards certain payments of the Trust only, including out-of-pocket expenses incurred by the Issuer Trustee which are not incurred in the ordinary course of the Trust.
Redraws, Senior Further Advances and Subordinate Further Advances
Redraws
Under the terms of most variable rate housing loans, a borrower may, subject to certain conditions, redraw previously prepaid principal.
In addition, some of the housing loans may not have been drawn down in full by the borrower when they are acquired by the Trust and the borrower will, subject to certain conditions, be entitled to draw down the housing loan to its approved limit. A borrower may draw or redraw an amount equal to the difference between the scheduled principal balance, being the principal balance if the housing loan had been drawn down in full and no amount had been prepaid, of his or her housing loan and the current principal balance of the housing loan. Any such advance by the Issuer Trustee to a borrower under a housing loan is referred to as a Redraw in this Information Memorandum. Each housing loan on which a Redraw has been advanced continues to retain the benefit of the related mortgage insurance policy.
Further Advances
The Issuer Trustee may also agree to make Further Advances to a borrower in excess of the scheduled principal balance of his or her loan. Further advances are divided into two categories, which in turn govern the priority of repayment between the sources of funding used by the Issuer Trustee to make those further advances. The two categories are:
Senior Further Advances, which must meet the requirements of a credit assessment based on the then current PUMA origination standards, be approved by the relevant mortgage insurer and enjoy the benefit of a mortgage insurance policy; and
Subordinate Further Advances, as described in "—Funding of Subordinate Further Advances" below.
However notwithstanding the foregoing or anything to the contrary in this Information Memorandum, the Issuer Trustee must not, and the Manager must not direct the Issuer Trustee to, make any Senior Further Advances. If the Manager wishes to make a Senior Further Advance to a borrower, the relevant housing loan must be sold out of the Trust to another PUMA trust. See "—Funding of Senior Further Advances" below.
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Funding of Redraws
The Issuer Trustee will be able to fund from Collections any Redraws by borrowers in respect of housing loans of the Trust. Thus, the Trust will have less funds available to pay principal on the Notes on the next Monthly Payment Date, but will have a correspondingly greater amount of assets with which to make future payments. In addition, in order to fund Redraws, the Issuer Trustee may, but is not obliged to, borrow funds under a redraw facility currently provided by Macquarie Bank Limited and/or issue Notes. See "PUMA Residential Loan Program", "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances" and "Description of the Transaction Documents and Parties—The Redraw Facility" below. If there are insufficient funds available to fund a Redraw the Issuer Trustee must decline the Redraw request.
Funding of Senior Further Advances
The Issuer Trustee will not make any Senior Further Advances in respect of a housing loan in the Trust. In the event that the borrower under a housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request, the Manager must direct the Issuer Trustee to sell that housing loan to another PUMA trust. See "Description of the Assets of the Trust—Sale of Housing Loans" below.
Funding of Subordinate Further Advances
If a Further Advance on a housing loan is made at any time without the benefit of a mortgage insurance policy then that Further Advance is known as a Subordinate Further Advance. A Subordinate Further Advance may only be funded by the Issuer Trustee (at the direction of the Manager) making a borrowing under the redraw facility. The redraw facility provider will be subordinated to Noteholders in payment of principal and interest on the redraw facility, prior to and after enforcement of the Security granted under the security trust deed, to the extent of an amount, determined at the time of such payment, representing Subordinate Further Advances which have not been repaid by borrowers. See "Description of the Cashflows of the Trust— Distribution of the Available Income Amount" and "Description of the Transaction Documents
and Parties—The Security Trust Deed—Priorities under the Security Trust Deed" below.
Hedging Arrangements
To manage its interest rate exposures:
the Issuer Trustee will enter into a basis swap to manage the basis risk between the interest rates on the housing loans which accrue interest at a variable rate of interest and the floating rate obligations of the Trust; and
the Issuer Trustee will enter into a fixed rate swap to manage the basis risk between the interest rates on the housing loans which accrue interest at a fixed rate of interest and the floating rate obligations of the Trust.
Collections
Amounts Received by Issuer Trustee
The Issuer Trustee will receive amounts, which are known as Collections, which in relation to a Collection Period means the aggregate of the following amounts (without double counting) in respect of housing loans then forming part of the assets of the Trust:
A less the sum of (B + C) where:
A = the sum of amounts for which a credit entry is made during the period to the accounts established in the records for those housing loans;
B = amounts for which a credit entry is made to the accounts established in the records for those housing loans which relates to any Defaulted Amount on those housing loans during the period; and
C = reversals made during the period to the accounts established in the records in respect of those housing loans where the original credit entry (or part thereof) was made in error or was made but
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subsequently reversed due to funds not being cleared;
any Recoveries received by the Issuer Trustee under or in respect of the housing loans during that period (less any reversals made during the period in respect of Recoveries where the original debit entry (or part thereof) was in error);
all amounts received under or in respect of any sale or transfer of any of the housing loans pursuant to the Transaction Documents during the period;
any amount in respect of damages or pursuant to an indemnity received by the Issuer Trustee as a result of a breach of any representation or warranty or undertaking by any party to the Transaction Documents;
any insurance proceeds received during the period by the Issuer Trustee in accordance with any mortgage insurance policy or any insurance policy;
from Originators under Mortgage Origination Deeds (as defined in the Management Deed);
income from other Authorised Investments which are not housing loans; and
proceeds of issue of Notes and Units in the Trust which, in either case, have not been applied by the Issuer Trustee towards the acquisition of housing loans or towards funding of the Liquidity Reserve on the Closing Date or towards redeeming the Class A Notes or the Class B1 Notes in the circumstances described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" below,
but excluding, for the avoidance of doubt:
any amount debited during the period to the accounts established in the records for those housing loans representing fees or
charges imposed by any governmental agency, bank accounts debits tax or similar tax or duty imposed by any governmental agency (including any tax or duty in respect of payments or receipts to or from bank or other accounts) or insurance premiums paid.
Collections will form part of the Available Income Amount and the Available Principal Amount to be paid or allocated by the Issuer Trustee on each Monthly Payment Date.
Interest on the Notes
Interest on the Notes is payable monthly in arrears on each Monthly Payment Date. Interest will be paid on the Class B1 Notes and, if any, the Class B1-R Notes on each Monthly Payment Date only after the payments of interest on the Class A Notes and, if any, the Class A-R Notes are made and certain other amounts ranking in priority to the Class B1 Notes and the Class B1-R Notes are made. Interest will be paid on the Class B2 Notes on each Monthly Payment Date only after the payments of interest on the Class A Notes, the Class A-R Notes, the Class B1 Notes and the Class B1-R Notes are made and certain other amounts ranking in priority to the Class B2 Notes are made.
Interest on each Note is calculated as described in "Description of the Notes—Interest on the Notes" below.
Principal on the Notes
Prior to enforcement of the Security granted under the security trust deed, the amount available on a Monthly Payment Date to be paid in respect of principal on the Notes will be allocated, after payment of prior ranking amounts, on the following basis:
first, pari passu and rateably:
to the Class A Noteholders towards repayment of principal of the Class A Notes on a pari passu and rateable basis until the Stated Amount of the Class A Notes is reduced to zero; and
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to the Class A-R Noteholders (if any) towards repayment of principal of the Class A-R Notes on a pari passu and rateable basis until the Stated Amount of the Class A-R Notes is reduced to zero;
second, pari passu and rateably:
to the Class B1 Noteholders towards repayment of principal of the Class B1 Notes on a pari passu and rateable basis until the Stated Amount of the Class B1 Notes is reduced to zero; and
to the Class B1-R Noteholders (if any) towards repayment of principal of the Class B1-R Notes on a pari passu and rateable basis until the Stated Amount of the Class B1-R Notes is reduced to zero; and
third, to the Class B2 Notes towards repayment of principal of the Class B2 Notes on a pari passu basis until the Stated Amount of the Class B2 Notes is reduced to zero.
Despite being ranked pari passu in respect of the repayment of principal, Class A Notes and Class A-R Notes can only ever both be outstanding at the same time on the date of issue of the Class A-R Notes, between the time when the Class A-R Notes are issued and the time when the proceeds of that issuance is used to fully redeem the Class A Notes. Similarly, Class B1 Notes and Class B1-R Notes can only ever both be outstanding at the same time on the date of issue of the Class B1-R Notes, between the time when the Class B1-R Notes are issued and the time when the proceeds of that issuance is used to fully redeem the Class B1 Notes. See the sections entitled "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" and "Description of the Cashflows of the Trust ——Distribution of the Available Principal Amount" below.
The outstanding Invested Amount of each Note on a Monthly Payment Date will be reduced by the
amount of the principal payment made on that date on that Note.
If the Security granted under the security trust deed is enforced after an event of default, the proceeds from the enforcement, after payment of prior ranking amounts, will be distributed in the following order:
first, pari passu and rateably to:
the Class A Noteholders, pari passu and rateably, towards principal and interest owing in respect of the Class A Notes; and
the Class A-R Noteholders, pari passu and rateably, towards principal and interest owing in respect of the Class A-R Notes;
second, pari passu and rateably to:
the Class B1 Noteholders, pari passu and rateably, towards principal and interest owing in respect of the Class B1 Notes; and
the Class B1-R Noteholders, pari passu and rateably, towards principal and interest owing in respect of the Class B1-R Notes; and
third, to the Class B2 Noteholders, pari passu and rateably, towards principal and interest owing in respect of the Class B2 Notes.
Optional Redemption
The Issuer Trustee will, if the Manager (at its option but subject to the limitation described below) directs it to do so:
redeem all of the Class A Notes and/or all of the Class B1 Notes in full on any Monthly Payment Date occurring on or after the Scheduled Maturity Date by applying the proceeds of the issue of any Refinancing Notes. In exercising this call option, the Manager may elect to have both the Class A Notes and the Class B1
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Notes redeemed on the same Monthly Payment Date or to have the Class A Notes redeemed on a particular Monthly Payment Date and the Class B1 Notes redeemed on a subsequent Monthly Payment Date, however the Class B1 Notes may not be redeemed pursuant to this call option prior to the Class A Notes being redeemed in full. See further "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date"; or
redeem the Notes in full on any Monthly Payment Date occurring on or after the Call Date by applying the Collections available for that purpose on that Monthly Payment Date, including the proceeds of a sale of Mortgage Loan Rights to another warehouse fund or sub-fund established pursuant to the PUMA Programme as set out below in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Notes on or after the Call Date".
If the Issuer Trustee redeems any Notes in accordance with the above, the relevant Noteholders will receive a payment equal to the outstanding Invested Amount of those Notes so redeemed plus accrued interest on the outstanding Invested Amount of those Notes.
Withholding Tax and TFNs
Payments of principal and interest on the Notes will be reduced by any applicable withholding taxes. The Issuer Trustee is not obligated to pay any additional amounts to the Noteholders to cover any withholding taxes. Any Noteholder so affected will receive less interest than is scheduled to be paid in respect of their Notes. This will be the case whether a Noteholder is an initial holder of the Notes or subsequently acquires the Notes.
Further, payments of principal and interest on the Notes will be subject to any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or
official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any law implementing such an intergovernmental agreement). Any such amounts withheld or deducted will be treated as paid for all purposes under the Notes, and no additional amounts will be paid on the Notes with respect to any such withholding or deduction.
Under current tax law, withholding tax will be deducted from interest payments to a Noteholder acquiring the Notes through their non-Australian operations, subject to the application of any exemption.
The Issuer Trustee will, at the direction of the Manager, seek to issue the Class A Notes (but not the Class B1 Notes or the Class B2 Notes) and interests in the Class A Notes (but not any interests in the Class B1 Notes or the Class B2 Notes) in a way that will satisfy the "public offer" exemption from interest withholding tax under section 128F of the ITAA 1936.
Other exemptions may apply depending on the identity of the relevant Noteholder.
In addition, tax will be deducted from income payments to a Noteholder acquiring the Notes through their Australian operations, who does not provide a tax file number or Australian business number (where applicable), or proof of a relevant exemption.
Further information on potential withholding taxes is provided under the headings "Taxation—Australian Tax Consequences" and "Taxation—Foreign Account Tax Compliance Act". Noteholders and prospective Noteholders should obtain advice from their own tax advisers in relation to the tax implications of an investment in the Notes.
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Transfer
The Notes may only be purchased or sold by execution and registration of a Noteholder Acknowledgement. For further details, see "Description of the Notes — Form of the Notes and the Register — Transfer of Notes".
In addition to the transfer restrictions set out above, the Notes can only be transferred if:
the aggregate consideration payable by each transferee is at least A$500,000 (calculated in accordance with section 708(9) of the Corporations Act and Regulation 7.1.18 of the Corporations Regulations (or its equivalent in other currencies, disregarding moneys lent by the offeror or its associates) or the relevant offer or invitation to purchase is not an offer or invitation that requires disclosure to investors under Part 6D.2 of the Corporations Act;
the transfer is not made to a person who is a Retail Client; and
the transfer does not require any document to be lodged with ASIC and complies with all applicable laws, regulations and directives.
Austraclear
It is intended that the Class A Notes, the Class B1 Notes and the Class B2 Notes will be lodged in Austraclear after issue. Any subsequent transfer of rights in relation to Notes must be in accordance with the Austraclear Regulations so long as the relevant Notes are held in Austraclear. For further details, see "Description of the Notes—Form of the Notes and the Register—Lodgement of Notes in Austraclear".
Stamp Duty
The Manager has received advice that neither the issue, the transfer, nor the redemption of the Notes will currently attract stamp duty in any jurisdiction of Australia. For further details, see "Taxation—Australian Tax Consequences—Other Taxes".
Ratings of the Notes
It is anticipated that the Class A Notes will be rated AAAsf by Fitch and AAA (sf) by S&P, the Class B1 Notes will be rated AAA (sf) by S&P and the Class B2 Notes will not be rated. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the relevant rating agency. The rating of the Notes addresses the likelihood of the payment of principal and interest on the Notes pursuant to their terms. Neither Fitch nor S&P will publish the ratings or any changes to the ratings prior to the Pricing Date. See "Risk Factors" below.
Investment Risks
There are material risks associated with an investment in Notes. See "Risk Factors" below.
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EUROPEAN UNION RISK RETENTION REQUIREMENTS
Macquarie Bank Limited, through special purpose vehicles known as PUMA Sub-Fund B1 and/or Mac Fund One (which are both wholly owned and financed by Macquarie Bank Limited and of which Perpetual Limited is trustee), will retain a material net economic interest of not less than five per cent in the securitisation as an “originator” in accordance with the text of each of Article 405 of Regulation (EU) No 575/2013 (the Capital Requirements Regulation) and Article 51 of Regulation (EU) No 231/2013 (the AIFM Regulation) (which, in each case, does not take into account any corresponding national measures) and publicly disclose the manner in which such interest is held. As at the Closing Date, such interest will be comprised of certain randomly selected exposures held by Macquarie Bank Limited, through PUMA Sub-Fund B1 and/or Mac Fund One, as required by the text of each of Article 405 and Article 51.
Perpetual Limited as trustee of the PUMA trusts is the lender of record for all housing loans originated into the PUMA Program. Each housing loan comprised in the pool of exposures to be securitised as PUMA Series 2014-2 was originated in the name of Perpetual Limited into a PUMA warehouse trust known as Mac Fund One and subsequently transferred to PUMA Sub-Fund B1. Some housing loans were then transferred from PUMA Sub-Fund B1 into other PUMA warehouses financed by entities which are unrelated to Macquarie Bank Limited. Perpetual Limited is the trustee of, and Macquarie Bank Limited owns the economic interest in, all of those PUMA trusts. Macquarie Bank Limited is also the financier of all of those PUMA trusts except for the externally funded PUMA warehouses.
The pool of housing loans to be securitised as PUMA Series 2014-2 has been selected from PUMA Sub-Fund B1 and the externally funded PUMA warehouses, while the retained exposures have been selected solely from PUMA Sub-Fund B1 pursuant to a selection process designed to ensure the quantitative and qualitative randomness of the retained exposures in relation to the securitised pool, as required by the text of each of Article 405 and Article 51. Macquarie Bank Limited’s on-going retention of the net economic interest described above will be confirmed in the monthly investor reports and any change to the manner in which such interest is held will be notified to Noteholders.
As to the information made available to prospective investors, reference is made to the information set out herein and forming part of this Information Memorandum and to any other information provided separately (which information will not form part of this Information Memorandum) and, after the Closing Date, to the monthly investor reports. For the avoidance of doubt, none of Macquarie Bank Limited, Macquarie Securitisation Limited, the Issuer Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Manager nor the Joint Lead Managers (or any of their respective related bodies corporate) makes any representation as to the accuracy or suitability of any financial model which may be used by a prospective investor in connection with its investment decision.
Each prospective investor is required to independently assess and determine the sufficiency of the information described above and in this Information Memorandum generally and the sufficiency of any other information which may be made available to the investor (if any) for the purposes of complying with each of Part Five of the Capital Requirements Regulation (including Article 405) and Section Five of Chapter III of the AIFM Regulation (including Article 51) and any corresponding national measures which may be relevant and none of Macquarie Bank Limited, Macquarie Securitisation Limited, the Issuer Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Manager nor the Joint Lead Managers or their respective related bodies corporate makes any representation that the information described above, in this Information Memorandum or any other information which may be made available to investors (if any) is sufficient in all circumstances for such purposes. Prospective investors who are uncertain as to the requirements of each of Part Five of the Capital Requirements Regulation (including Article 405) and Section Five of Chapter III of the AIFM Regulation (including Article 51) which apply to them in respect of their relevant jurisdiction should seek guidance from their regulator. Macquarie Bank Limited accepts responsibility for the information set out in this section (but not, for the avoidance of doubt, any information set out in any other section of this Information Memorandum referred to in this section).
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Macquarie Securitisation Limited has internal policies, practice and procedures in relation to the granting of credit, administration of credit-risk bearing portfolios and risk mitigation. The policies, practice and procedures of Macquarie Securitisation Limited in this regard broadly include the following:
criteria for the granting of credit and the process for approving, amending, renewing and re-financing credits, as to which please see the information set out earlier in this section of this Information Memorandum entitled "PUMA Residential Loan Program—Origination and Management of Housing Loans";
systems in place to administer and monitor the various credit-risk bearing portfolios and exposures, as to which the housing loan pool will be serviced in line with the usual servicing procedures of Macquarie Securitisation Limited;
diversification of credit portfolios given Macquarie Securitisation Limited’s distribution strategy and overall credit strategy, as to which, in relation to the housing loan pool, please see the section of this Information Memorandum entitled "PUMA Residential Loan Program—Origination and Management of Housing Loans"; and
policies and procedures in relation to risk mitigation techniques, as to which please see further the section of this Information Memorandum entitled "PUMA Residential Loan Program—Origination and Management of Housing Loans".
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RISK FACTORS
The purchase, and subsequent holding, of the Notes is not free of risk. The Manager believes that the risks described below are some of the principal risks inherent in the transaction for Noteholders and that the discussion in relation to the Notes indicates some of the possible implications for Noteholders. However, the inability of the Issuer Trustee to pay interest or principal on the Notes may occur for other unforeseen reasons and the Manager does not in any way represent that the description of the risks outlined below is exhaustive. It is only a summary of some particular risks. Further, although the Manager believes that the various structural protections available to Noteholders lessen certain of these risks, there can be no assurance that these measures will be sufficient to ensure the payment or distribution of interest or principal on the Notes on a timely or full basis. Prospective investors should also read the detailed information set out elsewhere in this Information Memorandum and make their own independent investigation and seek their own independent advice as to the potential risks involved in purchasing and holding the Notes.
The Notes will be paid only from the assets of the Trust and you may experience a loss if the assets of the Trust are insufficient to repay the Notes
The Notes are debt obligations of the Issuer Trustee only in its capacity as trustee of the Trust. The Notes do not represent an interest in or obligation of the Issuer Trustee in its individual capacity or of any of the other parties to the transaction. The assets of the Trust will be the sole source of payments on the Notes. The Issuer Trustee's other assets will only be available to make payments on the Notes if the Issuer Trustee is negligent, commits fraud or in some circumstances where the Issuer Trustee fails to comply with or breaches an obligation imposed upon it under the Transaction Documents and such failure constitutes a wilful default. Therefore, if the assets of the Trust are insufficient to pay the interest and principal on your Notes when due, there will be no other source from which to receive these payments and you may not get back your entire investment or the yield you expected to receive.
There is no way to predict the actual rate and timing of payments on the housing loans which may affect the yield on your investment
The rate of principal and interest payments on pools of housing loans varies among pools, and is influenced by a variety of economic, demographic, social, tax, legal and other factors, including prevailing market interest rates for housing loans and the particular terms of the housing loans. Moreover, it is not unusual for borrowers to make voluntary prepayments of principal in significant amounts. The reasons for voluntary prepayments include the absence of prepayment penalties under variable rate housing loans, Australia's strong home ownership ethos and the fact that certain housing loans allow the borrower to redraw prepaid funds. These factors could encourage borrowers to make payments in excess of the scheduled payments on their housing
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loans, and to make lump sum prepayments from time to time.
The failure by the Trust to fund Redraws as well as the ability of borrowers to redraw principal or request a Further Advance on the housing loans will also impact the rate and timing of payments on your Notes.
The method by which housing loans are distributed in the Australian market continues to change. In particular, the proportion of loans distributed through brokers has increased and it is possible that it could increase further. The increasing number of brokers in the market may have an impact on the frequency with which borrowers refinance their loans which could impact the timing of payments of principal on your Notes.
Each of the above factors makes it difficult to reliably predict the actual rate of prepayment of the housing loan pool or the rate and timing of payments of principal on your Notes. There is no guarantee as to the actual rate of prepayment on the housing loans or therefore, whether you will achieve the yield which you have anticipated you will achieve on your Notes. If you bought your Notes for more than their face amount, the yield on your Notes will drop if principal payments on your Notes occur at a faster rate than you expect. If you bought your Notes for less than their face amount, the yield on your Notes will drop if principal payments on your Notes occur at a slower rate than you expect.
Losses and delinquent payments on the housing loans may affect the return on your Notes
If borrowers fail to make payments of interest and principal under the housing loans when due and the credit enhancement described in this Information Memorandum is not enough to protect your Notes from the borrowers' failure to pay, the Issuer Trustee may not have enough funds to make full payments of interest and principal due on your Notes. Consequently, the yield on your Notes could be lower than you expect and you could suffer losses.
A wide variety of factors of a legal, economic, political or other nature could affect the performance of borrowers in making payments of principal and interest under the housing loans. In particular, if interest rates increase significantly, borrowers may experience distress and an increase in default rates on the housing loans may result.
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The borrower may apply for a variation to the terms of their housing loan on the grounds of financial hardship, which may be granted either by the Manager (see "Collection and Enforcement Procedures" below) or ordered by a court under the Consumer Credit Code or the National Credit Code (See "Description of the Assets of the Trust—Consumer Credit Code and National Credit Code" below). Any such variance may reduce the principal or interest payable under a particular housing loan.
Liquidation of a housing loan may cause delays in payment to you and affect the yield on your Notes
Substantial delays could be encountered in connection with the liquidation of a housing loan, which could impact the timing of payments to you on your Notes and as a consequence the yield on your Notes could be lower than you expect.
Shortfalls in proceeds received from enforcement of the mortgage related to the housing loan may cause losses to you
If the security provided by a mortgage is enforced and the proceeds of the sale of a mortgaged property, net of preservation and liquidation expenses, are less than the amount due under the related housing loan, the Issuer Trustee may not have enough funds to make full payments of interest and principal due to you, to the extent that the difference is not covered under a mortgage insurance policy.
Payments on the Class A Notes, Class A-R Notes, Class B1 Notes and the Class B1-R Notes will be paid before payments on the Class B2 Notes
Subject to the paragraph below, the holders of the Class A Notes and the Class A-R Notes (if any) are entitled to principal and interest payments before the holders of the Class B1 Notes and the Class B1-R Notes (if any). The holders of the Class B1 Notes and Class B1-R Notes (if any) are entitled to principal and interest payments before the holders of the Class B2 Notes. As a result Class B1 Noteholders, Class B1-R Noteholders (if any) and Class B2 Noteholders may not receive full repayment of principal or payment of interest on the Class B1 Notes, the Class B1-R Notes (if any) or the Class B2 Notes. Notwithstanding this subordination of the Class B1 Notes, the Class B1-R Notes (if any) and the Class B2 Notes there may be insufficient funds available to pay all principal and interest to the Class A Noteholders and the Class A-R Noteholders.
In the circumstance where the Class B1 Notes are refinanced by the issue of Refinancing Notes as further described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date", the Class B1 Notes will be repaid in full by applying the
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proceeds of the issue of the relevant Refinancing Notes and, as such, will repaid prior to repayment of the Class A-R Notes and the Class B1-R Notes.
Payments in respect of the redraw facility may be paid before payments to be paid on the Notes
Prior to enforcement of the Security granted under the security trust deed, if an amount is outstanding under the redraw facility, repayment of that outstanding amount, to the extent of the Senior Redraw Facility Principal, will rank ahead of any principal payments in respect of the Notes and any interest accrued on that outstanding amount, to the extent of the Senior Redraw Facility Interest, will rank equally with interest on the Class A Notes and the Class A-R Notes (if any) and ahead of interest on the Class B1 Notes, the Class B1-R Notes and the Class B2 Notes. Following enforcement of the Security granted under the security trust deed, if an amount is outstanding under the redraw facility, repayment of that outstanding amount, to the extent of the Senior Redraw Facility Principal, will rank equally with principal on the Class A Notes and Class A-R Notes and interest accrued on that outstanding amount, to the extent of the Senior Redraw Facility Interest, will rank equally with the interest on the Class A Notes and the Class A-R Notes (if any) and ahead of the interest on the Class B1 Notes, the Class B1-R Notes (if any) and the Class B2 Notes. Therefore, you may not receive full repayment of principal or payment of interest on your Notes.
The mortgage insurance policies may not be available to cover losses on the housing loans or on the mortgaged property
The mortgage insurance policies are subject to some exclusions from coverage and rights of refusal or reduction of claims, some of which are described under the heading "The Mortgage Insurance Policies" below. Therefore, borrowers' payments that are expected to be covered by the mortgage insurance policies may not be covered because of these exclusions, refusals or reductions. Moreover, a mortgage insurance provider may be unable or unwilling to perform obligations under a mortgage insurance policy or a mortgage insurance policy may be held unenforceable under applicable law. If such circumstances arise and the Issuer Trustee does not have enough money to make full payments of principal and interest on your Notes, you may not receive full repayment of principal and interest on your Notes.
The mortgage insurance policies do not cover losses which arise due to damage to the mortgaged property relating to the housing loans.
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Therefore, with the exception of reasonable wear and tear, any damage to, destruction of, or loss in respect of, the mortgaged property securing the housing loan, howsoever occasioned, may result in losses on the housing loan which are not covered by the mortgage insurance policy. In these circumstances, the Issuer Trustee may rely on the general insurance cover taken out by the borrower in respect of the mortgaged property. Such general insurance policy may not cover any damage to, destruction of, or loss in respect of, the mortgaged property which is occasioned by natural disasters or acts of war or terrorism. Accordingly, this may result in losses on the housing loans which may lead to losses to you.
Further, although the mortgagor is obligated to maintain full fire and general insurance cover, note the Issuer Trustee's interest as mortgagee in respect of this insurance cover and maintain this insurance cover throughout the term of the housing loan, there is no obligation on the Issuer Trustee or the Manager to inquire as to whether such underlying insurance policy is maintained or renewed.
You may not be able to resell your Notes The Joint Lead Managers are not required to assist you in reselling your Notes. A secondary market for your Notes may not develop even though the Notes may be listed on the ASX or any other stock exchange. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your Notes readily or at the price you desire. The market value of your Notes is likely to fluctuate, which could result in significant losses to you.
The termination of any of the swaps may subject you to losses from interest rate fluctuations
The Issuer Trustee will enter into an interest rate swap to exchange the interest payments from the fixed rate housing loans for variable rate payments. If this swap is terminated, the Interest Rate Swap Provider fails to perform its obligations, the swap is held unenforceable under applicable law or a judgment against the Interest Rate Swap Provider cannot be enforced, you may be exposed to the risk that the floating rate of interest payable on the Notes will be greater than the fixed rates set by the Issuer Trustee, acting on the direction of the Manager, on the fixed rate housing loans, which may lead to losses to you.
The Issuer Trustee will enter into an interest rate swap to manage the mismatch between the variable rate of interest charged on the variable
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rate housing loans and the floating rate of interest payable on the Notes. If this swap is terminated, the Interest Rate Swap Provider fails to perform its obligations, the swap is held unenforceable under applicable law or any judgments against the Interest Rate Swap Provider cannot be enforced, you may be exposed to the risk that interest payable on the Notes will be greater than the variable rate of interest charged on the variable rate housing loans, which may lead to losses to you.
The Manager's responsibility to manage the interest rate exposure may affect the rate of prepayments and the yield on your investment
The Manager is obligated under the Transaction Documents to endeavour if the Basis Swap is terminated to ensure, using the measures available to it in its capacity as Manager of the Trust, that the weighted average of the rates of interest charged on the variable rate housing loans is at least equal to the greater of:
the minimum weighted average rate of interest on all housing loans then forming assets of the Trust which would be sufficient when aggregated with all other income to ensure that the Issuer Trustee will have sufficient income available to it to enable it to meet the Total Expenses of the Trust as they fall due plus a margin of 0.25%; or
the rate of interest which produces an amount of income which will be sufficient, when aggregated with the income produced by the rate of interest on all other housing loans of the Trust and any other resources available to the Issuer Trustee, to enable the Issuer Trustee to comply with all of its obligations under the Transaction Documents as they fall due.
The measures available to the Manager include the ability to direct the Issuer Trustee to set the interest rates on the variable rate housing loans, subject to the terms of those housing loans and any applicable laws. These measures could cause higher rates of principal prepayment and delinquent payments by borrowers than you expected and could affect the yield on your Notes.
Termination payments relating to an interest rate swap are subject to credit risks and may reduce payments to you
Upon termination of a swap, a termination payment will be due either from the Issuer Trustee to the swap provider or vice versa. If the swap provider is required to make a termination
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payment to the Issuer Trustee upon the termination of a swap, then the Trust will be exposed to credit risk in relation to the capacity of that swap provider to make that termination payment. If the Issuer Trustee is required to make a termination payment to the swap provider upon the termination of a swap, the Issuer Trustee will make the termination payment from the assets of the Trust and, prior to enforcement of the Security granted under the security trust deed, that payment may, in some circumstances, be made in priority to payments on the Notes. Thus, if the Issuer Trustee makes a termination payment, there may not be sufficient funds remaining to pay interest on your Notes on the next relevant Monthly Payment Date, and the principal on your Notes may not be repaid in full.
Prepayments during a Monthly Period may result in you not receiving your full interest payments
If a prepayment is received on a housing loan during a Monthly Period, interest on the housing loan will cease to accrue on that portion of the housing loan that has been prepaid, starting on the date of prepayment. The amount prepaid may be invested in Authorised Investments that may earn a rate of interest lower than that paid on the housing loan. If it is less, the Issuer Trustee may not have sufficient funds to pay you the full amount of interest due to you on the next relevant Monthly Payment Date.
Payment holidays may result in you not receiving your full interest payments
If a borrower prepays principal on his or her housing loan, the direct debit or automatic salary deduction in relation to that borrower may be suspended in respect of each instalment paid in advance. If a significant number of borrowers suspend payments at the same time, the Issuer Trustee may not receive sufficient Collections to pay you the full amount of interest on the Notes on the next relevant Monthly Payment Date.
The proceeds from enforcement of the security trust deed may be insufficient to pay amounts due to you
If the Security Trustee enforces the Security granted under the security trust deed after an event of default, there is no assurance that the market value of the assets of the Trust will be equal to or greater than the outstanding principal and interest due on the Notes and the other secured obligations that rank ahead of the Notes, or that the Security Trustee will be able to realise the full value of the assets of the Trust.
Perpetual Limited, in its capacity as trustee of all the other PUMA trusts, has the right to acquire all the housing loans upon enforcement of the Security granted under the security trust deed for
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an amount equal to their then outstanding principal balance plus or minus an adjustment for any fixed rate housing loans not transferred with the benefit of an interest rate swap. If the Issuer Trustee, at the direction of the Manager, exercises this right, the Security Trustee will not be able to realise any value on the housing loans in excess of their outstanding principal balance other than any adjustment in its favour in respect of fixed rate housing loans.
The Issuer Trustee, the Security Trustee, and any receiver, to the extent they are owed any fees or expenses will generally be entitled to receive the proceeds of any sale of the assets of the Trust before payments on the Notes. Consequently, the proceeds from the sale of the assets of the Trust after an event of default under the security trust deed may be insufficient to pay you principal and interest in full.
If the Manager directs the Issuer Trustee to redeem the Notes early, the yield on your Notes could be lower than expected
If the Manager directs the Issuer Trustee to redeem the Notes early, as described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" and "Description of the Notes—Redemption of the Notes—Optional Redemption of all Notes on or after the Call Date", the early retirement of your Notes will shorten their average lives and may result in a lower yield on your Notes than expected.
The Manager’s right to redeem the Notes early is discretionary only
The Manager may or may not exercise its right to direct the Issuer Trustee to redeem the Notes prior to the Final Maturity Date in the circumstances described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" and "Description of the Notes—Redemption of the Notes—Optional Redemption of all Notes on or after the Call Date". Accordingly, there is no certainty that your Notes will be redeemed before the Final Maturity Date.
Issuer Trustee's ability to set the interest rate on variable rate housing loans may lead to increased delinquencies or prepayments
The interest rates on the variable rate housing loans are not tied to an objective interest rate index, but are set at the sole discretion of the Issuer Trustee acting on the direction of the Manager. If the Issuer Trustee increases the interest rates on the variable rate housing loans, borrowers may be unable to make their required payments under the housing loans, and
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accordingly, may become delinquent or may default on their payments. In addition, if the interest rates are raised above market interest rates, borrowers may refinance their loans with another lender to obtain a lower interest rate. This could cause higher rates of principal prepayment than you expected and affect the yield on your Notes.
This Information Memorandum provides information regarding only a portion of the housing loan pool, and additional housing loans subsequently added to the housing loan pool could have different characteristics
This Information Memorandum describes only the characteristics of the housing loan pool as at the Preparation Date of the Information Memorandum. While they must satisfy the criteria specified in this Information Memorandum, the housing loans acquired on the Closing Date may not have the identical characteristics or statistical composition of the housing loan pool as described in this Information Memorandum. For example, such housing loans may be of a different credit quality or seasoning. If you purchase a Note, you must not assume that the characteristics of the housing loan pool will be identical to the characteristics of the housing loan pool disclosed in this Information Memorandum.
The features of the housing loans may change, which could affect the timing and amount of payments to you
The borrower in respect of a housing loan may request a change in one or more of the terms of the housing loan. If the Manager wishes to agree to any such request and the relevant change, but the Manager cannot do so while that housing loan is held by the Trust, the Manager must first direct the Issuer Trustee to sell that housing loan to another PUMA trust. The refinancing or removal of housing loans from the Trust could cause you to experience higher rates of principal prepayment than you expected, which could affect the yield on your Notes.
If the Issuer Trustee, at the direction of the Manager, fails to offer desirable features offered by its competitors, borrowers might elect to refinance their loans with another lender to obtain more favourable features. In addition, the housing loans included in the Trust are not permitted to have some features. If a borrower requests to add one of these features to his or her housing loan, the housing loan may be transferred to another PUMA trust if the Manager wishes to agree to any such request or may be repaid early. The early repayment or removal of housing loans could cause you to experience higher rates of principal prepayment than you expected, which could affect the yield on your Notes.
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The Manager or its related companies may commingle collections on the housing loans with their assets
In some circumstances, the Manager or a company related to the Manager may in the future, in order to facilitate the clearing of payments on the housing loans, receive Collections on behalf of the Issuer Trustee which the Manager or its related company may retain for a period of 2 Business Days, or longer if the Manager is satisfied that such retention will not result in a downgrading, withdrawal or qualification of any rating then assigned by the rating agencies to the Notes, before remitting them to the Issuer Trustee. During this period the Collections may be commingled with the assets of the Manager or its related company. In this regard, to the extent that the assets are retained by Macquarie Bank Limited, section 13A(3) of the Banking Act 1959 provides that in the event of Macquarie Bank Limited becoming unable to meet its obligations, the assets of Macquarie Bank Limited in Australia shall be available to meet its deposit liabilities in Australia in priority to all of its other liabilities. If the Manager or its related company becomes insolvent, the Issuer Trustee may only be able to claim those Collections as an unsecured creditor of the insolvent company. This could lead to a failure to receive the Collections on the housing loans, delays in receiving the Collections, or losses to you.
There are limited remedies available to the Issuer Trustee in respect of a breach of the representations and warranties given in respect of the housing loans
The Manager makes certain representations and warranties as at the Closing Date to the Issuer Trustee in relation to the housing loans.
The Manager will certify that nothing has come to its knowledge which would lead it to believe that any of those representations and warranties were incorrect, untrue or misleading in any material respect when they were made or given by the Manager at the time of the transfer of each housing loan to the Trust.
The Issuer Trustee has not investigated or made any enquiries regarding the accuracy of the representations and warranties. Under the Sub-Fund Notice, the Issuer Trustee is under no obligation to test the truth of the representations and warranties and is entitled to rely entirely upon the representations and warranties being correct unless it is actually aware of any breach. The Manager has agreed in the Sub-Fund Notice to procure the repurchase of any housing loan in respect of which it is discovered by the Issuer
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Trustee or the Manager within the Prescribed Period that any one of the representations and warranties given by the Manager was incorrect when given and notice of such discovery is given by the Manager to the Issuer Trustee or by the Issuer Trustee to the Manager, as applicable, no later than five Business Days prior to the expiry of the Prescribed Period, unless such breach is remedied to the satisfaction of the Issuer Trustee within five Business Days of each notice being given. If the Issuer Trustee discovers that a representation and warranty was incorrect when given in relation to a housing loan after the last day that the above notice can be given, the Manager has agreed to pay damages to the Issuer Trustee for any loss or costs incurred by the Issuer Trustee. However, the amount of such loss or costs cannot exceed the principal amount outstanding and accrued but unraised interest and any outstanding fees in respect of the housing loans. Besides these two remedies, there is no other express remedy available to the Issuer Trustee in respect of a breach of the representations and warranties given in respect of the housing loans.
A decline in Australian economic conditions or a change in macroeconomic variables may lead to losses on your Notes
If the Australian economy were to experience a decline in economic conditions, an increase in interest rates, a fall in property values or any combination of these factors, delinquencies or losses on the housing loans might increase, which might cause losses on your Notes.
Consumer protection laws may affect the timing or amount of interest or principal payments to you
Some of the borrowers may attempt to make a claim to a court requesting changes in the terms and conditions of their housing loan or compensation or penalties for breaches of any legislation relating to consumer credit. Any changes which allow the borrower to pay less principal or interest under his or her housing loan, or to delay such payments, may delay or decrease the amount of payments to you.
In addition, the Issuer Trustee is subject to the penalties and compensation provisions of the applicable consumer protection laws. The Issuer Trustee has a limited indemnity from the Manager in respect of such liabilities. To the extent that the Issuer Trustee is unable to recover any such liabilities under the consumer protection laws from the Manager, the assets of the Trust will be used to indemnify the Issuer Trustee prior to payments to you. This may delay or decrease the amount of Collections available to make payments
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to you.
Changes to Australian Consumer Law Unfair Terms
On 1 July 2010, the Trade Practices Amendment (Australian Consumer Law) Act (No.1) 2010 (TPA Act) came into force. The TPA Act introduced into the Trade Practices Act 1974 (Cth) (which was subsequently amended and renamed the Competition and Consumer Act 2010) a national unfair terms regime whereby a term of a standard form consumer contract entered into or varied on or after 1 July 2010 will be unfair, and therefore void, if it causes a significant imbalance in the parties' rights and obligations under the contract, is not reasonably necessary to protect the supplier's legitimate interests and it would cause detriment to a party if applied or relied on.
In New South Wales, the unfair terms regime (contained in Part 5G of the Fair Trading Act 1987 (NSW)) was enacted on 1 July 2010 which mirrors the unfair terms regime set out in the TPA Act. These provisions will apply to loans which are originated or varied on or after 1 July 2010.
In June 2009, Victoria extended its unfair terms regime (contained in Part 2B of the Fair Trading Act 1999 (Vic)) to apply to Consumer Credit Code regulated credit contracts, which had previously been excluded. Under the Victorian regime, a term in a consumer contract is unfair and therefore void if it is a prescribed unfair term or if a court or Tribunal determines that in all the circumstances it causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer. Under the transitional provisions, the legislation will apply to loans originated or varied on or after 11 June 2009, but, in the case of a variation, only to the extent of the variation.
Western Australia has implemented the unfair terms regime set out in the TPA Act with effect from 1 January 2011 by enactment of a new single act – Fair Trading Act 2010 (WA) – that will replace the existing Consumer Affairs Act 1971 (WA), Fair Trading Act 1987 (WA) and Door to Door Trading Act 1987 (WA).
Consumer Credit
The National Consumer Credit Protection Act
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2009 (NCCP Act), which includes a new National Credit Code (National Credit Code), commenced operation on 1 July 2010.
The National Credit Code applies (with some limited exceptions) to housing loans that had previously been regulated under the Consumer Credit Code and also to all new housing loans made after 1 July 2010.
The NCCP Act incorporates a requirement for providers of credit related services to hold an "Australian credit licence", and to comply with "responsible lending" requirements, including a mandatory "unsuitability assessment" before a loan is made or there is an agreed increase in the amount of credit under a housing loan.
Obligations under the NCCP Act extend to the Issuer Trustee and the Manager in respect of any housing loans which are assets of the Trust and to their respective service providers in respect of those housing loans.
Under the terms of the National Credit Code, Issuer Trustee would be a "credit provider" with respect to housing loans which are assets of the Trust, and as such is exposed to civil and criminal liability for certain violations. These include violations caused in fact by the Manager. The Manager has given a limited indemnity to the Issuer Trustee for certain civil or criminal penalties in respect of National Credit Code violations caused by the Manager (see "Description of the Assets of the Trust—Consumer Credit Code and National Credit Code). There is no guarantee that the Issuer Trustee will have the financial capability to pay any civil or criminal penalties which arise from National Credit Code violations.
Under the National Credit Code, a borrower in relation to a regulated housing loan may have the right to apply to a court to:
(a) vary the contractual terms applicable to that housing loan on the grounds of hardship or that it is an unjust contract;
(b) reduce or cancel any interest rate payable on the housing loan which is unconscionable;
(c) have certain provisions of the housing
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loan or related security which are in breach of the legislation declared unenforceable; or
(d) obtain restitution or compensation in relation to any breach of the National Credit Code.
Any order made under any of the above consumer credit laws may affect the timing or amount of principal repayments under the relevant housing loans which may in turn affect the timing or amount of payments by the Issuer Trustee when due.
The concentration of housing loans in particular states or regions may increase the possibility of loss on your Notes
The Trust may contain a high concentration of housing loans secured by properties located within one or more states or regions. Any deterioration in the real estate values in or the economy of any Australian state or region, and any deterioration in these states or regions with high concentrations of housing loans in particular, could result in higher rates of delinquencies, foreclosures and losses than expected on the housing loans. In addition, these states or regions, or any other Australian states or regions, may experience natural disasters or acts of war or terrorism, which may not be fully insured against and which may result in property damage and losses on the housing loans. These events may in turn have a disproportionate impact on funds available to the Trust, which could cause you to suffer losses.
Ratings of the Notes do not ensure their payment and withdrawal of any ratings may affect the value of the Notes
It is a condition to the issuance of the Notes that the Class A Notes be rated AAAsf by Fitch and AAA (sf) by S&P, the Class B1 Notes be rated AAA (sf) by S&P only and the Class B2 Notes will not be rated by S&P or Fitch. A rating is not a recommendation to purchase, hold or sell the Notes, inasmuch as such rating does not address the market price or the suitability for a particular investor of a security. The rating of the Notes addresses the likelihood of the payment of principal and interest on the Notes pursuant to their terms. There is no assurance that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by the rating agency, if in its judgment circumstances in the future so warrant. The ratings of the Notes will be based primarily on the creditworthiness of the housing loans, the availability of Available Income Amounts after payment of interest on the Notes and the Trust's expenses, the mortgage insurance policies and the
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creditworthiness of the swap providers and the mortgage insurers.
Interest Withholding Tax Payments of principal and interest on the Notes will be reduced by any applicable withholding taxes. The Issuer Trustee is not obligated to pay any additional amounts to the Noteholders to cover any withholding taxes and thus, any Noteholder so affected will receive less principal or interest (as applicable) than is scheduled to be paid in respect of their Notes.
Under present law, interest paid on the Notes will generally be subject to Australian interest withholding tax if it is paid to a non-resident of Australia (and is not derived by the non-resident in carrying on business at or through an Australian permanent establishment) or it is paid to a resident of Australia in connection with a business carried on at or through a permanent establishment outside Australia, unless an exemption applies.
The Issuer Trustee will, at the direction of the Manager, seek to issue the Class A Notes (but not the Class B1 Notes or the Class B2 Notes) and interests in the Class A Notes (but not any interests in the Class B1 Notes or the Class B2 Notes) in a way that will satisfy the "public offer" exemption from interest withholding tax under section 128F of the ITAA 1936. However, this exemption will be failed if it is known or reasonably suspected that the Class A Notes or an interest in them will be acquired directly or indirectly by any Offshore Associates of the Issuer Trustee or the Manager (which would include certain associates of the Macquarie Group), other than in the capacity of dealer, manager or underwriter in relation to the placement of the Notes, or in the capacity of a clearing house, custodian, funds manager or responsible entity of a registered scheme.
Under current tax law, tax will be deducted from income payments to a Noteholder acquiring the Notes through their Australian operations, who does not provide a tax file number or Australian business number (where applicable), or proof of a relevant exemption.
Further information on potential withholding taxes is provided under the heading "Taxation—Australian Tax Consequences". Noteholders and prospective Noteholders should obtain advice from their own tax advisers in relation to the tax
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implications of an investment in the Notes.
U.S. Foreign Account Tax Compliance Act withholding may affect payments on the Notes
Whilst the Notes are held within the Austraclear system, in all but the most remote circumstances, it is not expected that the new reporting regime and potential withholding tax imposed by sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (FATCA) will affect the amount of any payment received by Austraclear. However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any such custodian or intermediary generally is unable to receive payments free of FATCA withholding. It also may affect payment to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA) and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA withholding. Investors should consult their own tax adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. The Issuer Trustee’s payment obligations under the Notes are discharged once it has paid Austraclear and the Issuer Trustee therefore has no responsibility for any amount thereafter transmitted through the Austraclear system and custodians or intermediaries. Prospective investors should refer to the section "Taxation—Foreign Account Tax Compliance Act."
Inability to find a replacement redraw facility provider
The redraw facility may be terminated in some circumstances. If a replacement redraw facility is not entered into the Issuer Trustee may be required to reject some or all requests for Redraws made by borrowers. This may in turn cause borrowers to refinance or repay their housing loans, resulting in an early repayment of principal on your Notes.
The Australian Anti-Money Laundering and Counter- Terrorism Financing Act
The Anti-Money Laundering and Counter-Terrorism Financing Act (the AML/CTF Act)
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received Royal Assent and certain parts of the Act came into effect on 12 December 2006. The provisions of the AML/CTF Act have now taken effect. The AML/CTF Act brings about a number of significant changes to Australia's anti-money laundering and counter-terrorism financing regulation.
An entity has obligations under the AML/CTF Act, where it provides a designated service which includes:
opening or providing certain accounts, allowing any transaction in relation to such an account or receiving instructions to transfer money in and out of such an account;
making loans to a borrower or allowing a transaction to occur in respect of that loan in certain circumstances;
providing a custodial or depository service;
issuing or selling a security in certain circumstances; and
exchanging one currency for another in certain circumstances.
These obligations will include undertaking customer due diligence before a designated service is provided. The obligations also include, but are not limited to, conducting on-going customer due diligence and reporting of suspicious and other transactions.
The obligations placed upon an entity can affect the services of an entity or the funds it provides and ultimately may result in a delay or decrease in the amounts an investor receives.
Personal Property Securities Act 2009 (Cth) A new personal property security regime commenced operation throughout Australia on 30 January 2012 pursuant to the Personal Property Securities Act 2009 (Cth) (PPS Act). The PPS Act adopts a "functional approach" to security interests. This means that the PPS Act regulates any interest in relation to personal property that, in substance, secures payment or performance of an obligation. In addition, the PPS Act regulates security interests which are deemed to arise upon the transfer of certain types of assets (including
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loans); these are generally referred to as "deemed security interests". The PPS Act does not regulate the granting of security interests in land.
Generally, in order to be perfected under the PPS Act, a security interest should be registered on the register maintained pursuant to the PPS Act (the PPS register).
If a security interest is not perfected by a registration on the PPS register or otherwise, there is a risk that:
another person may acquire an interest in the assets which are subject to the security interest free of that security interest;
another security interest may take priority; or
the holder of the security interest may not be able to enforce it against a grantor who becomes insolvent.
As a result, there could be delays and/or reductions in collections on the housing loans available to make payments on the Notes.
Additionally, as the personal property security regime is new to the Australian security landscape, there is uncertainty as to its implementation from a legal and practical perspective and accordingly market practice and the application and interpretation of the PPS Act continues to evolve.
A Joint Lead Manager’s interest as Noteholder may conflict with the interests of other Noteholders
One or more of the Joint Lead Managers or their respective affiliates and one or more accounts or funds managed by a Joint Lead Manager or their respective affiliates may from time to time hold Notes and the Arranger or one of more of its respective affiliates is expected to acquire the Initial Notes on the Closing Date and each other Joint Lead Manager or one of more of their respective affiliates is expected to acquire the Initial Notes on the Closing Date for investment, trading or other purposes (collectively, the JLM Noteholders).
No JLM Noteholder will be required to retain any Notes acquired by it and a JLM Noteholder may realise a gain in the secondary market by selling
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Notes purchased by it. The JLM Noteholders, individually and together, may be able to influence the voting rights of the Classes of Notes which they hold, and thereby have an effect on certain aspects of the transaction generally. To the extent that one or more JLM Noteholders hold a majority of rights as Voting Secured Creditors they may be able to exercise their rights to direct the Security Trustee as to the actions to be taken on the occurrence of an event of default (which may include declaring the Notes immediately due and payable).
A JLM Noteholder is not restricted from performing or enforcing its rights and interests under the Transaction Documents or in respect of any Notes held by it and may otherwise continue or take steps to further or protect any of those rights and interests and its business even where such rights or interests conflict with the interests of Noteholders, potential investors or any other parties to the Transaction Documents, and the JLM Noteholder may in so doing act without notice to, and without regard to, the interests of any such person. The interests of any JLM Noteholder may not coincide with those of the other Noteholders at all times. Any JLM Noteholder in its capacity as a Noteholder may act in its own commercial interests and need not consider whether its actions will have an adverse effect on the Trustee or the other Noteholders. The JLM Noteholders will have no obligation to hold Notes on or after the Closing Date or to retain Notes for any length of time.
Implementation of and/or changes to the Basel III framework may affect the capital requirements and/or the liquidity associated with a holding of the Notes for certain investors
The Basel Committee on Banking Supervision (the Basel Committee) approved significant changes to the Basel II regulatory capital and liquidity framework in 2011 (such changes being commonly referred to as Basel III). In particular, Basel III provides for a substantial strengthening of existing prudential rules, including new requirements intended to reinforce capital standards (with heightened requirements for global systemically important banks) and to establish a leverage ratio "backstop" for financial institutions and certain minimum liquidity standards (referred to as the Liquidity Coverage Ratio and the Net Stable Funding Ratio). It is intended that member countries will implement the new capital standards and the new Liquidity Coverage Ratio as soon as possible (with provision for phased implementation, meaning that the measure will not apply in full until
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January 2019) and the Net Stable Funding Ratio from January 2018. Implementation of Basel III requires national legislation and therefore the final rules and the timetable for their implementation in each jurisdiction may be subject to some level of national variation. The Basel Committee has also published certain proposed revisions to the securitisation framework, including changes to the approaches to calculating risk weights and a new risk weight floor of 15%.
In September 2012, following a period of consultation with Australian authorised deposit-taking institutions, APRA released the final prudential reporting standards that will govern the implementation of Basel III in Australia. In November 2012, APRA released updated prudential standards which incorporated the Basel III requirements in relation to counterparty credit risk. The November 2012 release represented the final measures to complete implementation of the Basel III capital reforms in Australia. APRA requires that Australian authorised deposit-taking institutions meet the new capital requirements from 1 January 2013.
APRA is also continuing consultation on Basel III measures relating to minimising cliff effect and addressing reliance on credit ratings and is proposing to press ahead with its original timetable for the implementation of the new global liquidity standards (notwithstanding the Basel Committee’s proposed gradual phase-in of such standards). In December 2013, APRA released final prudential standards which incorporate the Basel III requirements in relation to liquidity by introducing a liquidity coverage ratio and net stable funding ratio, which come into effect 1 January 2015 and 1 January 2018, respectively. The changes approved by the Basel Committee and their expected implementation in Australia may have an impact on the capital requirements in respect of the Notes and/or on incentives to hold the Notes for investors that are subject to requirements that follow the relevant framework and, as a result, they may affect the liquidity and/or value of the Notes.
In general, investors should consult their own advisers as to the regulatory capital requirements in respect of the Notes and as to the consequences for and effect on them of any changes to the Basel framework (including the changes described above) and the relevant implementing measures
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by APRA. No predictions can be made as to the precise effects of such matters on any investor or otherwise.
Regulatory initiatives may result in increased regulatory capital requirements and/or decreased liquidity in respect of the Notes
In Europe, the United States and elsewhere there is increased political and regulatory scrutiny of the asset-backed securities industry. This has resulted in a raft of measures for increased regulation which are currently at various stages of implementation and which may have an adverse impact on the regulatory capital charge to certain investors in securitisation exposures and/or the incentives for certain investors to hold asset-backed securities, and may thereby affect the liquidity of such securities. Investors in the Notes are responsible for analysing their own regulatory position and none of the Macquarie Bank Limited, Macquarie Securitisation Limited, the Issuer Trustee, the Manager, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One nor the Joint Lead Managers or their respective related bodies corporate make any representation to any prospective investor or purchaser of the Notes regarding the regulatory capital treatment of their investment on the Closing Date or at any time in the future.
In particular, investors should be aware of the European Union risk retention and due diligence requirements which currently apply, or are expected to apply in the future, in respect of various types of European Union regulated investors including credit institutions, authorised alternative investment fund managers, investment firms, insurance and reinsurance undertakings and UCITS funds. Amongst other things, such requirements restrict a relevant investor from investing in asset-backed securities unless (i) that investor is able to demonstrate that it has undertaken certain due diligence in respect of various matters including its note position, the underlying assets and (in the case of certain types of investors) the relevant sponsor or originator and (ii) the originator, sponsor or original lender in respect of the relevant securitisation has explicitly disclosed to the investor that it will retain, on an on-going basis, a net economic interest of not less than 5% in respect of certain specified credit risk tranches or asset exposures. Failure to comply with one or more of the requirements may result in various penalties including, in the case of those investors subject to regulatory capital requirements, the imposition of a penal capital charge on the notes acquired by the
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relevant investor.
Aspects of the requirements and what is or will be required to demonstrate compliance to national regulators remain unclear and this uncertainty is increased by certain legislative developments. In particular, in the context of the requirements which apply in respect of European Union regulated credit institution investors, investment firms and authorised alternative investment fund managers, the corresponding interpretation materials (to be made in the form of technical standards) have not yet been finalised. No assurance can be provided that such final materials will not affect the compliance position of previously issued transactions and/or the requirements applying to relevant investors in general.
The risk retention and due diligence requirements described above apply, or are expected to apply, in respect of the Notes. Investors should therefore make themselves aware of such requirements (and any corresponding implementing rules of their regulator), where applicable to them, in addition to any other regulatory requirements applicable to them with respect to their investment in the Notes. With respect to the commitment of Macquarie Bank Limited to retain (through its wholly owned and funded special purpose vehicles known as PUMA Sub-Fund B1 and/or Mac Fund One) a material net economic interest in the securitisation and with respect to the information to be made available by the Issuer Trustee or another relevant party, please see the statements set out under the heading "European Union Risk Retention Requirements". Relevant investors are required to independently assess and determine the sufficiency of the information described above for the purposes of complying with any such relevant risk retention and due diligence requirements and none of the Macquarie Bank Limited, Macquarie Securitisation Limited, the Issuer Trustee, Perpetual Limited as trustee of both PUMA Sub-Fund B1 and Mac Fund One, the Manager nor the Joint Lead Managers or their respective related bodies corporate make any representation that the information described above is sufficient in all circumstances for such purposes.
The European Union risk retention and due diligence requirements described above and any other changes to the regulation or regulatory treatment of the Notes for some or all investors
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may negatively impact the regulatory position of individual investors and, in addition, have a negative impact on the price and liquidity of the Notes in the secondary market.
Insolvency proceedings and subordination provisions
There is uncertainty as to the validity and/or enforceability of a provision which (based on contractual and/or trust principles) subordinates certain payment rights of a creditor to the payment rights of other creditors of its counterparty upon the occurrence of insolvency proceedings relating to that creditor. In particular, recent cases have focused on provisions involving the subordination of a hedging counterparty's payment rights in respect of certain termination payments upon the occurrence of insolvency proceedings or other default on the part of such counterparty (so-called flip clauses). Such provisions are similar in effect to the terms which will be included in the Transaction Documents relating to the subordination of Excluded Swap Termination Amounts.
The English Supreme Court has held that a flip clause as described above is valid under English law. Contrary to this, however, the US Bankruptcy Court has held that such a subordination provision is unenforceable under US bankruptcy law and that any action to enforce such provision would violate the automatic stay which applies under such law in the case of a US bankruptcy of the counterparty. The implications of this conflicting judgment are not yet known, particularly as the US Bankruptcy Court approved, in December 2010, the settlement of the case to which the judgment relates and subsequently the appeal was dismissed. However, there remains a stayed action in the U.S. commenced by the Lehman Brothers Chapter 11 debtors concerning the enforceability of flip clauses and, in addition, in February 2012, a complaint was filed by certain parties seeking recognition and enforcement of the Belmont decision (and corresponding lower court decisions) and other declaratory relief with respect to the flip clause in question in the case described above. At the same time as filing the complaint, the relevant parties also filed a motion seeking the withdrawal of the reference from the U.S. Bankruptcy Court, requesting that the complaint be heard instead by the U.S. District Court. It has not yet been determined whether the complaint will be addressed by the U.S. Bankruptcy Court or the U.S. District Court, nor is it known when the
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complaint will be addressed.
If a creditor of the Issuer Trustee (such as the Interest Rate Swap Provider) or a related entity becomes subject to insolvency proceedings in any jurisdiction outside England and Wales (including, but not limited to, the United States), and it is owed a payment by the Issuer Trustee, a question arises as to whether the insolvent creditor or any insolvency official appointed in respect of that creditor could successfully challenge the validity and/or enforceability of subordination provisions included in the New South Wales law governed Transaction Documents (such as a provision of the priority of payments which refers to the ranking of the Interest Rate Swap Provider’s payment rights in respect of Excluded Swap Termination Amounts). In particular, based on the decision of the US Bankruptcy Court referred to above, there is a risk that such subordination provisions would not be upheld under US bankruptcy laws. Such laws may be relevant in certain circumstances with respect to a range of entities which may act as the Interest Rate Swap Provider, including US established entities and certain non-US established entities with assets and/or operations in the US (although the scope of any such proceedings may be limited if the relevant non-US entity is a bank with a licensed branch in a US state). In general, if a subordination provision included in the Transaction Documents was successfully challenged under the insolvency laws of any relevant jurisdiction outside England and Wales and any relevant foreign judgment or order was recognised by the English courts, there can be no assurance that such actions would not adversely affect the rights of the Noteholders, the market value of the Notes and/or the ability of the Issuer Trustee to satisfy its obligations under the Notes.
Lastly, given the general relevance of the issues under discussion in the judgments referred to above and that the Transaction Documents will include terms providing for the subordination of Excluded Swap Termination Amounts, there is a risk that the final outcome of the dispute in such judgments (including any recognition action by the English courts) may result in negative rating pressure in respect of the Notes. If any rating assigned to the Notes is lowered, the market value of the Notes may reduce.
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THE ISSUER TRUSTEE, MACQUARIE BANK LIMITED AND THE MANAGER
The Issuer Trustee
On 9 January 2006, Perpetual Trustees Australia Limited changed its name to Perpetual Limited. Perpetual Limited (ABN 86 000 431 827), was incorporated on 31 July 1963 and is the holding company of Perpetual Trustee Company Limited, the Security Trustee. The registered office of the Issuer Trustee is at Level 12, Angel Place, 123 Pitt Street, Sydney, New South Wales, Australia. Perpetual Limited was incorporated as, and continues to operate as, a limited liability company under the Corporations Act. Perpetual Limited is listed on the ASX and its shares are quoted on that exchange.
Perpetual Trustee Company Limited has obtained an Australian Financial Services Licence under Part 7.6 of the Corporations Act (Australian Financial Services Licence No. 236643). Perpetual Trustee Company Limited has appointed Perpetual Limited to act as its authorised representative under that licence (Authorised Representative No. 264842).
Macquarie Bank Limited
Macquarie Bank Limited is the holding company of the Manager, Macquarie Securitisation Limited, the redraw facility provider, an Interest Rate Swap Provider and the beneficial owner of the PUMA warehouse trust. Macquarie Bank Limited's ordinary shares were listed on the ASX on 29 July 1996 until the corporate restructuring of Macquarie Group in November 2007. As part of the restructure, Macquarie Bank Limited became an indirect subsidiary of Macquarie Group Limited.
Macquarie Group is a global provider of banking, financial, advisory, investment and funds management services. Macquarie's main business focus is making returns by providing a diversified range of services to clients. As at 31 March 2014 Macquarie Group employed over 13,900 people located in 28 countries. As of 31 March 2014 Macquarie Group Limited had $A2.71 billion in surplus regulatory capital on an APRA Basel III basis. As at 31 March 2014, Macquarie Bank Limited had an APRA Basel III Common Equity Tier 1 ratio of 9.6%.
Macquarie Bank Limited is currently rated, short term, "A-1" by Standard & Poor's, "F1" by Fitch Ratings and "P-1" by Moody's and, long term, "A" by Standard & Poor's, "A" by Fitch Ratings and "A2" by Moody's.
The activities of Macquarie Group Limited and Macquarie Bank Limited come under the regulatory supervision of APRA, which is the prudential regulator of the Australian financial services industry.
The Manager
The Manager, Macquarie Securitisation Limited, is a registered Australian company which has registered for an ACL (registration number 361802) and is a wholly owned subsidiary of Macquarie Bank Limited. It is the Manager of all the trusts in the PUMA Program. The principal activity of Macquarie Securitisation Limited is origination, servicing and securitisation of mortgage and other assets. The Manager's registered office is at 1 Martin Place, Sydney, New South Wales, Australia.
1 Calculated at 7% RWA.
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DESCRIPTION OF THE TRUST
PUMA Program
The PUMA Program is an umbrella term for a number of separate trust funds that are subject to the Trust Deed. The Trust Deed provides the general framework under which trust funds may be established from time to time and provides for the creation of an unlimited number of trust funds. Macquarie Securitisation Limited is the manager and Perpetual Limited is the trustee of each of the trust funds created under the PUMA Program. There are two classes of trust funds which may be created under the Trust Deed - warehouse funds and sub-funds. A warehouse fund may be used to originate housing loans in preparation for the securitisation of those housing loans in the future and currently there is one warehouse fund. The purpose of a sub-fund is to issue debt instruments and to use the proceeds from the issuance of the Notes to acquire housing loans. Each warehouse fund and sub-fund are separate and independent trusts within the PUMA Program and the assets and liabilities of each fund are segregated from those of any other PUMA warehouse fund or sub-fund.
The Trust issuing the Offered Notes under this Information Memorandum is a sub-fund, known as "PUMA Series 2014-2" and is to be established under the Trust Deed and the sub-fund notice. This Information Memorandum describes certain terms and conditions of the Trust and the other trusts relating to the Notes. The assets of the Trust are not available to meet the liabilities of any other PUMA trust and none of the assets of any other PUMA trust are available to meet the liabilities of the Trust.
The Trust
The detailed terms of the Trust are set out in the Trust Deed and the sub-fund notice. The sub-fund notice, which supplements the general framework under the Trust Deed with respect to the Trust, does the following:
specifies the details of the Notes;
establishes the cash flow allocation and provides for the creation and maintenance of the Liquidity Reserve;
provides for the beneficial ownership of the Trust by the income and capital unitholders; and
amends the Trust Deed to the extent necessary to give effect to the specific aspects of the Trust and the issue of the Notes.
The beneficial interest in the Trust is held by Macquarie Bank Limited as the initial Income Unitholder and the Capital Unitholder. The income units may be transferred or sold by Macquarie Bank Limited to any other member of the Macquarie Group or to an entity unrelated to the Macquarie Group. The unitholders are only entitled to receive payments or distributions subject to prior ranking entitlements described under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" and "Description of the Cashflows of the Trust—Distribution of the Available Principal Amount" below.
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DESCRIPTION OF THE ASSETS OF THE TRUST
Assets of the Trust
The assets of the Trust will include the following:
the pool of housing loans, including all:
principal payments paid or payable on the housing loans on and after the Closing Date;
interest payments paid or payable on the housing loans on and after the Closing Date;
fees paid or payable on the housing loans at any time on and after the Closing Date;
rights under the mortgages and any collateral securities securing the housing loans and the individual property insurance policies covering the mortgaged properties relating to the housing loans;
rights under the mortgage insurance policies in relation to the housing loans;
the other Authorised Investments of the Trust including amounts on deposit in the bank accounts established in connection with the Trust and any instruments in which these amounts or other assets of the Trust are invested; and
the Issuer Trustee's rights under the Transaction Documents.
The Housing Loans
The housing loans are secured by registered first ranking mortgages on properties located in Australia. The housing loans have been originated in the name of Perpetual Limited in its capacity as trustee of the PUMA Program. For further information regarding the origination of housing loans for the PUMA Program see "PUMA Residential Loan Program—Origination and Management of Housing Loans" below.
Each housing loan will be one of the types of products described in "PUMA Residential Loan Program— PUMA's Product Types" below. Each housing loan may have some or all of the features described in "PUMA Residential Loan Program—Special Features of the Housing Loans" below. The housing loans are fixed rate and/or variable rate loans. The mortgaged properties consist of owner-occupied properties and non-owner occupied properties, but do not include mobile homes which are not permanently affixed to the ground, commercial properties or land on which a house is in the process of being constructed.
In addition, the housing loans must at the date of origination comply with the following criteria:
housing loans must be secured by a first mortgage over freehold land in Australia, or over leasehold land in Australia with a lease term of at least 10 years longer than the term of the Loan, in either case where the zoning and use of the property is for residential purposes;
the mortgage is to be registered under the appropriate statute of the State or Territory in which the property is located;
all evidence of title and ancillary documents and insurance must be verified by the Issuer Trustee or the Manager prior to the housing loan being originated or acquired, and the corresponding mortgage being treated as an approved housing loan. The Issuer Trustee or the Manager will be taken to have verified evidence of title and ancillary documents and insurances if it sights a certificate given by an approved lawyer verifying those matters (or obtains such other confirmation, enhancement or
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warranty as it is directed to obtain by the Manager in lieu of a certificate given by an approved lawyer); and
the housing loan must be a loan made in Australian dollars and repayable in Australia in Australian dollars.
If any housing loan did not comply with the criteria listed above at the date of its origination, the Issuer Trustee may be able to claim damages from the Manager subject to the terms and conditions of the Management Deed and the Trust Deed or, in specific circumstances, the Issuer Trustee may be able to require the Originator responsible for the origination of the housing loan to repurchase the housing loan (in accordance with the requirements of the applicable mortgage origination agreement).
Some of the housing loans acquired by the Trust on the Closing Date, may have existing Subordinate Further Advances, as described in "—Redraws, Senior Further Advances and Subordinate Further Advances" below, at the time of their acquisition. Where this is the case, the acquisition of the portion of the housing loan consisting of the Subordinate Further Advance will be funded by making a subordinated drawing under the redraw facility. The repayment of this subordinated drawing is described under the heading "Description of the Transaction Documents and Parties—The Redraw Facility— Repayment of Redraw Advances" below.
The Housing Loan Pool
The information in Annexure 1 sets forth various details relating to the pool of housing loans proposed to be acquired by the Issuer Trustee on the Closing Date. This information is provided by the Manager as of the close of business on 27 May 2014. All amounts have been rounded to the nearest dollar or to 2 decimal places for percentages. The sum in any column may not equal the total indicated due to rounding.
Note that the statistical information provided in the tables in Annexure 1 may not reflect the actual housing loan pool as of the Closing Date. This is because the pool of housing loans to be acquired by the Trust on the Closing Date will not be finalised until immediately prior to the Closing Date. The Manager will prepare an updated copy of the statistical information provided in the following tables after the Closing Date reflecting the details of the actual housing loan pool that was acquired on the Closing Date with the proceeds from the issue of the Offered Notes and will provide such updated tables to the Joint Lead Managers. Macquarie Bank Limited will post the tables to its web site at:
www.macquarie.com.au/securitisation
In addition, the pool of housing loans held by the Trust will change over time in the circumstances described in the section entitled "Description of the Assets of the Trust—Acquisition of the Housing Loans on the Closing Date" and "—Acquisition of the Housing Loans after the Closing Date".
However, notwithstanding anything to the contrary in this Information Memorandum, the Manager must not direct the Issuer Trustee to, and the Issuer Trustee must not, purchase any additional housing loans or substitute any housing loans following the Closing Date.
The current loan-to-value ratio has been calculated by comparing the current outstanding balance of the housing loan to the valuation of each security property determined for the purpose of approving the housing loan. There has not been any revaluation of the housing loan security for the specific purpose of the issue of the Notes. Revaluations are only conducted in circumstances where one of the properties securing a housing loan that is secured by two or more properties has been released from the related mortgage securing the housing loan, where one property securing a housing loan is substituted for another property, if a borrower has been given a Further Advance or if a borrower requests a permanent reduction in their credit limit to an amount below the scheduled amortised balance for that loan. An insignificant proportion of the properties securing the housing loans have been re-valued in this manner.
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Acquisition of Housing Loans on the Closing Date
All of the housing loans acquired by the Trust have been originated in the name of Perpetual Limited in its capacity as trustee of the PUMA warehouse trust as described above under the heading "Description of the Assets of the Trust—The Housing Loans". Some of the housing loans, prior to their acquisition by the Trust, may have been held by other trusts within the PUMA Program, including a trust within the PUMA Program pursuant to which the Manager has exercised an option to redeem all of the notes issued by that particular trust.
The housing loans to be assigned to the trust on the Closing Date will be identified in a transfer proposal. A transfer proposal is a written proposal from the Manager to the Issuer Trustee pursuant to which the Manager proposes that the Issuer Trustee purchase, as trustee of the Trust, all right, title and interest in the housing loans identified in that transfer proposal. If the Issuer Trustee accepts the transfer proposal (by advising the Manager so orally) and the Issuer Trustee pays an amount equal to the principal balance outstanding of the housing loans on the Closing Date to Perpetual Limited as trustee of the PUMA warehouse trust or such other PUMA trusts from which those housing loans are being acquired, the Issuer Trustee will, without any further act or thing, and without any instrument being brought into existence, be vested with the entire right, title and interest in those housing loans.
On the Closing Date, Perpetual Limited will cease to hold the relevant pool of housing loans in its capacity as trustee of the PUMA warehouse trust or those other PUMA trusts and will instead hold them as Issuer Trustee for the benefit of the Trust. The amount paid by the Trust in respect of the acquisition of housing loans may be increased or decreased by an adjustment for any fixed rate housing loans not transferred with the benefit of an interest rate swap. In addition, the Issuer Trustee, if so directed by the Manager, may make an adjustment for accrued interest which may be payable on the Closing Date or some other date after the Closing Date (as determined by the Manager).
Acquisition of Housing Loans after the Closing Date
Notwithstanding anything to the contrary in this Information Memorandum, the Issuer Trustee must not acquire any additional housing loans or substitute any housing loans following the Closing Date. However, following the Closing Date, the Manager may allow a housing loan which is an asset of the Trust to convert from a floating rate of interest to a fixed rate of interest, provided:
there will be sufficient Collections from that housing loan to cover the proportionate amount of fees and expenses pertaining to that housing loan as described under paragraphs (a) to (f) inclusive under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount";
the Manager ensures that immediately following such conversion, the aggregate of the outstanding principal balance of all housing loans, which have a fixed rate of interest, in the Trust, as a percentage of the aggregate of the outstanding principal balance of all housing loans in the Trust, does not exceed 30%; and
the Issuer Trustee and the Manager then have in place or have entered into a fixed rate swap in respect of the relevant housing loan, provided that the Manager has advised the Issuer Trustee, after providing notice to each rating agency, that this will not result in a downgrading, qualification or withdrawal of the rating given to the Notes by the rating agencies.
In addition, the Manager may agree to extend the period for which a fixed rate of interest applies to a housing loan in the Trust which was subject to a fixed rate of interest on the Closing Date, if there will be sufficient Collections from that housing loan to cover the proportionate amount of fees and expenses pertaining to those housing loans as described under paragraphs (a) to (f) inclusive under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
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Redraws, Senior Further Advances and Subordinate Further Advances
The Issuer Trustee, at the direction of the Manager, may make Redraws and Further Advances in respect of the housing loans. The Manager however is under no obligation to approve a Redraw or Further Advance request from a borrower or to direct the Issuer Trustee to make Redraws or Further Advances.
Further Advances are divided into two categories, which in turn govern the priority of repayment between the sources of funding utilised by the Issuer Trustee to make those Further Advances. The two categories are:
Subordinate Further Advances; and
Senior Further Advances.
A Subordinate Further Advance is a Further Advance which is made at any time to the extent that it is made without the benefit of insurance under a mortgage insurance policy.
A Subordinate Further Advance may be funded by the Issuer Trustee (on the direction of the Manager) only by making a subordinated drawing under the redraw facility. The repayment of this subordinated drawing is described under the heading "Description of the Transaction Documents and Parties—The Redraw Facility—Repayment of Redraw Advances" below.
A Senior Further Advance is a Further Advance which is not a Subordinate Further Advance. The Issuer Trustee will not make any Senior Further Advances in respect of a housing loan in the Trust. In the event that the borrower under a housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request, the Manager must direct the Issuer Trustee to sell that housing loan to another PUMA trust. See "—Sale of Housing Loans" below.
A Redraw may be funded by the Issuer Trustee:
on a Monthly Payment Date, by applying available funds under the set order of priorities, as described in "Description of the Cashflows of the Trust—Distribution of the Available Principal Amount" below;
on any day other than a Monthly Payment Date, by applying Collections provided that:
the amount of Collections, other than the Liquidity Reserve, applied does not exceed the then Principal Collections;
the Liquidity Reserve, if applied, will not be reduced below the then Required Liquidity Reserve; and
the Manager is of the opinion that the funds applied will not be required for expenses of the Trust set out in paragraphs (a) to (f) (inclusive) under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" below, on the following Monthly Payment Date; or
on any day by applying advances under the redraw facility.
If the Issuer Trustee has insufficient funds available to it to fund a Redraw or a Subordinate Further Advance then it must decline the Redraw or Subordinate Further Advance request. Furthermore, the Manager is not obliged to draw on the redraw facility in order to fund a Redraw or a Subordinate Further Advance.
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Sale of Housing Loans
The Issuer Trustee, at the direction of the Manager, may sell housing loans which are assets of the Trust to another PUMA trust, if:
the borrower under the housing loan requests to:
convert the housing loan from a floating rate to a fixed rate of interest; or
extend the period for which a fixed rate of interest applies to the housing loan,
which the Manager cannot agree to while the housing loan is held in the Trust pursuant to the Sub-Fund Notice;
the borrower under the housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request; and/or
the borrower under the housing loan requests a variation to the terms of the housing loan (including any request following an offer by the Manager) which the Manager cannot agree to while the housing loan is held in the Trust.
If a housing loan is sold by the Trust in accordance with the foregoing, the Trust will receive, subject to the following, the principal balance of the housing loan from the acquiring PUMA trust and will be entitled to accrued interest and a premium (to be determined by the Manager) on the housing loan up to the date of sale. The amount paid to the Trust in respect of the sale of housing loans may be increased or decreased by an adjustment for any fixed rate housing loans not transferred with the benefit of an interest rate swap. In addition, the PUMA trust acquiring the housing loan, if so directed by the Manager, may make an adjustment for accrued interest.
The Manager is not required to direct the Issuer Trustee to sell any housing loans but the Manager may elect to so direct or not direct the Issuer Trustee in its absolute discretion.
Eligible Mortgage Loan
The Manager gives certain representations and warranties in respect of each housing loan, which include that the housing loan is an "Eligible Mortgage Loan" as at the Closing Date. An Eligible Mortgage Loan is a housing loan that satisfies the following conditions:
(a) it has a stated term remaining to maturity as at the Closing Date not exceeding 30 years and one month;
(b) it was advanced in, and is repayable in, Australian Dollars;
(c) it has a principal balance outstanding equal to or less than $A1,000,000;
(d) as at the Closing Date no payment due from the borrower under the housing loan is in arrears by more than 30 days;
(e) the mortgage in respect of the housing loan is a first mortgage over land which is zoned by the relevant government body in a manner which permits a residential building;
(f) the housing loan and mortgage is covered by a mortgage insurance policy, for the scheduled term of the housing loan, from a mortgage insurer;
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(g) the housing loan has a loan-to-value ratio equal to or less than 92%, determined at or about the Closing Date;
(h) if the housing loan is subject to an interest-only period, the period during which only interest payments are to be made does not exceed 5 years; and
(i) subject to any interest-only period, there has been at least one minimum scheduled monthly repayment of principal made in respect of the housing loan (other than any line of credit loan, being a housing loan which, when settled, is not fully advanced to the relevant borrower and accordingly entitles that relevant borrower to require, subject to any cancellation of the undrawn limit, one or more further drawdowns throughout the term of that housing loan (which further drawdowns may be made by the capitalisation of interest) to the extent that when those further drawdowns are aggregated with the initial advance they do not exceed the agreed limit for that housing loan),
or such other Eligibility Criteria as the Issuer Trustee and the Manager may agree in writing prior to the Closing Date.
Representations and Warranties
On the Closing Date, the following representations and warranties will be given by the Manager in respect of the housing loans sold by the Manager to the Trust on the Closing Date:
(a) at the time that the Issuer Trustee entered into the housing loan, the housing loan complied in all material respects with all applicable laws;
(b) all consents required in relation to the transfer of the housing loans have been obtained and those housing loans are transferable;
(c) each housing loan is valid, binding and enforceable, subject to principles of equity and the laws concerning insolvency, bankruptcy, liquidation, administration or reorganisation or other laws generally affecting creditors' rights or duties;
(d) at the time that the Issuer Trustee entered into the housing loan, the housing loan was originated in accordance with the Manager’s standard procedures in relation to origination;
(e) Perpetual Limited is the sole legal and beneficial owner of the housing loan and mortgage and, to its knowledge, the housing loan and mortgage is owned by Perpetual Limited free and clear of any Security Interest (other than any Security Interest arising solely as the result of any action taken by Perpetual Limited);
(f) it is not aware of any fraud, dishonesty, material misrepresentation or negligence in connection with the selection and offer to the Issuer Trustee of each housing loan;
(g) each of the relevant documents relating to the housing loans (other than the insurance policies in respect of land) which are required to be stamped with stamp duty have been duly stamped;
(h) as far as it is aware, Perpetual Limited holds all documents in respect of the housing loans that are reasonably necessary to enforce its rights under the housing loans;
(i) the housing loan is an Eligible Mortgage Loan as at the Closing Date; and
(j) except in respect of a housing loan subject to a fixed rate of interest (or a rate of interest which can be converted into a fixed rate of interest or a fixed margin relative to a benchmark) and except as may be provided by applicable laws (including the Consumer Credit Code and the NCCP Act, as applicable), any binding provision or any competent authority or as may be provided in the
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corresponding documents relating to that housing loan, the interest rate payable on a housing loan is not subject to any limitation and no consent, additional memoranda or other writing is required from the relevant borrower to give effect to a change in the interest rate payable on the housing loan and, subject to the foregoing, any change in the interest rate may be set at the sole discretion of the Issuer Trustee (at the direction of the Manager) and is effective no later than when notice is given to the borrower in accordance with the terms of the relevant housing loan.
Breach of Representations and Warranties
If the Manager or the Issuer Trustee become actually aware that a representation or warranty was materially breached or materially incorrect when given in respect of a housing loan forming part of the assets of the Trust it must give notice to the other party to the Sub-Fund Notice, within five Business Days of the relevant party becoming so aware. If any representation or warranty is incorrect when given and notice of this is given or received by the Manager or the Issuer Trustee not later than five Business Days prior to the expiry of the Prescribed Period, and the breach is not remedied to the satisfaction of the Issuer Trustee within five Business Days of the notice being given, then the Manager must procure payment by another PUMA trust to the Issuer Trustee of the principal balance outstanding in respect of the relevant housing loan plus the arrears of interest and any accrued interest (in each case, as at the date of delivery of the notice referred to above) and on receipt of such payment by the Issuer Trustee, the relevant housing loan will be treated as having been repaid in full.
During the Prescribed Period, the Issuer Trustee’s sole remedy for any of the representations or warranties being incorrect is the right to the above payment procured by the Manager. The Manager has no other liability for any loss or damage caused to the Issuer Trustee, any Noteholder or any other person.
If a representation or warranty by the Manager in relation to a housing loan is discovered to be incorrect after the last day for giving notices in the Prescribed Period, the Manager must indemnify the Issuer Trustee against any costs, damages or loss arising from the representation or warranty being incorrect. The amount of such costs, damages or loss must be agreed between the Issuer Trustee and the Manager. The amount of such costs, damages or loss must not exceed the principal amount outstanding, together with any accrued but unraised interest and any outstanding fees, in respect of the housing loan.
The above are the only rights that the Issuer Trustee has if a representation or warranty given by the Manager in relation to a housing loan is discovered to be incorrect.
Certification of Housing Loans
Prior to the transfer of each housing loan to the Trust, the Manager will give certain certifications to the Issuer Trustee regarding each housing loan. Those certifications include that, to the best of the Manager's knowledge and belief:
on the date of its first settlement by Perpetual Limited, each housing loan and mortgage was an approved housing loan, as described in "Description of the Assets of the Trust—The Housing Loans" for the purposes of the Trust Deed and, as of the date of the certification, nothing has come to its actual attention that the housing loan and mortgage is not still an approved housing loan;
nothing has come to the Manager's actual attention which would lead it to believe that any of the warranties, statements, certificates or other information provided to the Manager, Macquarie Bank Limited or the Issuer Trustee by the corresponding Originator, any panel lawyer, any panel valuer or any other person prior to the first settlement of the housing loan or mortgage by Perpetual Limited, as trustee of the PUMA Program, were incorrect, untrue or misleading in any material respect at the time they were made or given, other than as disclosed in writing to the Issuer Trustee;
nothing has come to the Manager's actual attention which would lead it to believe that there has been any material change in respect of any of the matters referred to in the warranties, statements,
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certificates or other information referred to in the preceding paragraph which would adversely affect the benefit of the security provided by the mortgage in relation to each housing loan or its coverage under the corresponding mortgage insurance policy, other than as disclosed in writing to the Issuer Trustee;
the borrower under the housing loan is not more than 30 days in arrears, as at the date of transfer of the housing loans to the Trust, other than as disclosed in writing to the Issuer Trustee;
between the date of first settlement of the housing loan by Perpetual Limited, as trustee of the PUMA Program, and the date of the certification, there has been no material default by the borrower under the housing loan, other than as disclosed in writing to the Issuer Trustee;
no event of default under the security trust deed has occurred; and
upon settlement of the transfer of the beneficial interest in the housing loans to the Trust under the Trust Deed and the sub-fund notice, the Issuer Trustee as trustee of the Trust will obtain the benefit of all mortgages, collateral securities, and other benefits in relation to the housing loans.
The Manager is not obligated to make any inquiry or investigation of the matters referred to in the certification. However, in the event that any of these certifications are untrue, the Trust may have recourse, in appropriate circumstances, to the relevant party from whom the Manager obtained such information or to the Manager in accordance with the provisions of the Trust Deed, subject to certain limitations including the limitation of the Manager's liability under the Transaction Documents. See "Description of the Transaction Documents and Parties—The Trust Deed and Management Deed — Limitation of Manager's Liability".
Additionally, at the time that each housing loan is first transferred out of the PUMA warehouse trust, Macquarie Bank Limited, as beneficial owner of the PUMA warehouse trust, will give certain certifications to the Issuer Trustee. The time at which these certifications will be given will not necessarily coincide with transfer of the housing loan to the Trust. In many cases the housing loan is transferred first to another PUMA trust where it is held for a period of time before being transferred to the Trust. In this latter circumstance no fresh certifications are given by either the beneficial owner of the PUMA warehouse trust or such PUMA trust in conjunction with the ultimate transfer from that other PUMA trust to the Trust, although, as explained below, the benefit of the initial certifications will be held by the Issuer Trustee for the Trust.
The certifications given by Macquarie Bank Limited, as the beneficial owner of the PUMA warehouse trust, are that it is, and will continue to be until the time of transfer out of the PUMA warehouse trust, the sole beneficial owner of the housing loan and the corresponding mortgages and collateral securities and mortgage insurance policy, free of any security interest whatsoever.
Each of the certifications from the Manager and Macquarie Bank Limited, as the beneficial owner of the PUMA warehouse trust referred to above, is given to Perpetual Limited and is held by it as trustee of the PUMA trust that holds the housing loan to which the certifications relate. Accordingly, in the case of a housing loan acquired by the Trust, the corresponding certifications and any related recourse will be held by the Issuer Trustee as trustee for the Trust and will form part of the assets subject to the Security granted under the security trust deed as security for the Notes. In making any such certification, the Manager may rely on certain certifications provided in its favour by the Issuer Trustee in its capacity as trustee of the PUMA sub-fund from whom the Trust is acquiring the housing loans to which the certification provided by the Manager relates.
Other Features of the Housing Loans
The housing loans have the following features.
Interest is calculated daily and charged monthly in arrears, or biweekly in arrears if the borrower has elected to make biweekly payments during an interest only period.
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They are governed by the laws of one of the following Australian States or Territories:
New South Wales;
Victoria;
Western Australia;
Queensland;
South Australia;
Tasmania;
Northern Territory; or
the Australian Capital Territory.
Consumer Credit Code and National Credit Code
Under the Consumer Credit Code or the National Credit Code (as applicable), a borrower has the right to apply to a court to do the following, among other things:
vary the terms of a housing loan on the grounds of hardship or that it is an unjust contract;
reduce or cancel any interest rate payable on a housing loan if the interest rate is changed in a way which is unconscionable;
have certain provisions of a housing loan which are in breach of the legislation declared unenforceable;
obtain an order for a civil penalty against the Issuer Trustee, the amount of which may be set off against any amount payable by the borrower under the applicable housing loan; or
obtain restitution or compensation from the Issuer Trustee in relation to breaches of the Consumer Credit Code or the National Credit Code (as applicable) in relation to a housing loan.
Any order under the Consumer Credit Code or the National Credit Code may affect the timing or amount of interest or principal payments or repayments under the relevant housing loan, which might in turn affect the timing or amount of interest or principal payments or repayments to you under the Offered Notes. The Manager will indemnify the Issuer Trustee against any civil and criminal penalties under the Consumer Credit Code, the National Credit Code or the National Consumer Credit Legislation in relation to the Trust (except to the extent that such penalties arise as a result of the fraud, negligence or wilful default of the Issuer Trustee). There is no guarantee that the Issuer Trustee will have the financial capability to pay any civil or criminal penalties which arise from Credit Code violations.
General Insurance
Mortgagors are obligated to effect full fire and general insurance coverage, noting the Issuer Trustee's interest as mortgagee, for all properties securing a housing loan, and to maintain that coverage throughout the term of the housing loan. However, the Manager is not obligated to make any inquiry or investigation as to whether any insurance coverage in respect of a housing loan is maintained or renewed by the mortgagor following origination of that housing loan.
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Other Assets of the Trust
Other Authorised Investments
Apart from housing loans, the Issuer Trustee as trustee for the Trust may invest in the following investments (along with the housing loans the Authorised Investments) only:
cash;
bonds, debentures, stock or treasury bills or Notes or other securities issued by the Commonwealth of Australia or the government of any State or Territory of the Commonwealth;
debentures or stock of any Commonwealth or State public statutory authority where the repayment of principal and the payment of interest is guaranteed by the Commonwealth or the government of that State;
deposits with, or the acquisition of certificates of deposits issued by, a bank; and
bills of exchange accepted or endorsed by a bank which have a maturity date of not more than 200 days,
which does not, in each case, constitute a securitisation exposure or resecuritisation exposure (as defined in Prudential Standard APS 120 dated January 2013 issued by the Australian Prudential Regulation Authority including any amendment or replacement of that Prudential Standard).
All Authorised Investments, apart from cash and housing loans, are required to have maturity dates such that their proceeds will be available to meet the Issuer Trustee's obligations in respect of the Notes as they fall due.
Unless otherwise agreed by Fitch and S&P, all of the above Authorised Investments must have a remaining term to maturity at the date of acquisition of 365 days or less. All of the above Authorised Investments (other than cash and housing loans) which have a remaining term to maturity at the date of acquisition of:
up to 30 days, must have, or the issuer in respect thereof must have, a minimum long-term issuer default rating of "A" or a minimum short-term issuer default rating of at least "F1" from Fitch or from S&P of "A-1"; or
between 31 days and 365 days, must have, or the issuer in respect thereof must have, a short-term credit rating from Fitch of "F1+" or a long term senior unsecured credit rating from Fitch of at least "AA-" or a long-term credit rating from S&P of "AA-" or a short-term credit rating from S&P of "A-1+".
Trust Bank Account
The Issuer Trustee will establish and maintain one or more bank accounts for the Trust. Each bank account must be an Authorised Investment as described in the preceding paragraphs. The initial bank account for the Trust will be established with Australia and New Zealand Banking Group Limited, ABN 11 005 357 522 at its 68 Pitt Street, Sydney branch.
Combined Bank Account
Perpetual Limited may also hold other bank accounts, which must be Authorised Investments, as trustee of a number of PUMA trusts, into which payments in respect of the Trust may be made. Perpetual Limited holds such bank accounts as trustee of each PUMA trust to the extent that it has funds in the account. Amounts may only be withdrawn from such an account in respect of a PUMA trust to the extent of funds held in the
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account in respect of that PUMA trust. The bank which holds the account must agree not to set-off the funds in the account against any liability to the bank nor to combine the account with any other account. If one particular trust becomes insolvent, the creditors of that trust will only have recourse to so much in the account that is held by Perpetual Limited as trustee of that trust. At present the only such accounts are held with Westpac Banking Corporation ABN 33 007 457 141 at its 273 George Street, Sydney branch and Macquarie Bank Limited ABN 46 008 583 542 at its 1 Shelley Street, Sydney branch.
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PUMA RESIDENTIAL LOAN PROGRAM
Origination and Management of Housing Loans
Origination and Solicitation of Housing Loans
Housing loans are originated in the name of Perpetual Limited in its capacity as trustee of the PUMA Program through a variety of origination channels including mortgage brokers and aggregators, referrers, and brand originators (each an Originator and together, Originators). Before being appointed, each Originator must demonstrate to the Manager satisfactory loans origination, appropriate licensing, marketing and/or broking experience as relevant, supported by such qualifications as the Manager deems appropriate in accordance with the PUMA Parameters (which may include industry references, adequate systems and procedures, and sufficient professional indemnity insurance cover). Each Originator is appointed by way of a written agreement addressing the rights and obligations of the parties to it.
Arrangements with Originators are regularly reviewed by the Manager.
Housing loan applications are solicited by the Originators through various means, depending on the particular type and sales strategies of each Originator. Some of the typical means by which housing loan applications are solicited include direct marketing (including direct mail campaigns, marketing material appearing on websites and advertising campaigns via television, print media and radio), referral of individual housing loan applicants from referrers and brokers, and enabling housing loan applications to be filed at the offices of Originators or via websites established by Originators.
In addition, Originators may also have:
mobile sales personnel (either employed directly or contracted by the Originator) who visit potential loan applicants either in their homes or their offices; and
telephone call centres which can be used for direct marketing purposes, receiving inquiries from potential housing loan applicants and for initiating the mailing out of housing loan applications to potential applicants.
Origination and Settlement of Housing Loans
The current origination and settlement process for a housing loan involves the following key steps:
an application from an intending borrower is submitted to the Manager either directly or via an Originator;
the application is reviewed for indicative approval by the Manager;
an approved valuer is instructed to value the security property;
the application is forwarded to the relevant mortgage insurer for approval, unless the housing loan falls within that category for which mortgage insurance is not required; and
the Manager prepares the loan contract, and a panel lawyer is instructed to prepare mortgage documentation and settle the housing loan. Panel lawyers are responsible for serving all documentation in accordance with all applicable requirements of the Consumer Credit Code and the National Credit Code, and are instructed to use standard PUMA housing loan documentation and operate in accordance with the PUMA Parameters.
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Prior to the settlement of a housing loan, in accordance with the requirements of the relevant origination agreement, the panel lawyer provides warranties and certifications in respect of that housing loan in favour of the Issuer Trustee and the Manager. On receipt of those warranties and certifications the Issuer Trustee as trustee of the relevant PUMA fund authorises the advance of the housing loan and makes the necessary funds available for settlement. The origination and settlement process is regularly reviewed by the Manager.
The housing loans to be acquired by the Trust have been originated over a period of time. Accordingly, as the origination and settlement process is subject to change from time to time, it is likely that some of those housing loans were originated pursuant to origination and settlement processes that differ from current processes, as outlined above.
Approval and Underwriting Process
When a housing loan application is received, it is processed in accordance with the Manager’s credit policy. This policy is subject to continuous review by the Manager. Among other things, the policy sets out the underwriting criteria that are used in assessing housing loan applications, determining the suitability of loan applicants and evaluating the value and adequacy of the property to be used as security for the housing loan.
Lender's mortgage insurance, providing 100% coverage against loss on the entire loan (except in relation to any Subordinate Further Advance and subject to any relevant policy exceptions), is mandatory for all housing loans, including those with an LTV (defined below) of below 80%.
Where circumstances warrant, giving overall consideration to the strength of the application, a housing loan may be made with the approval of a senior credit officer of the Manager where certain elements are outside the usual credit policy.
In limited situations, discounted interest rates may be provided to retain existing borrowers or to attract certain categories of new borrowers.
All borrowers must satisfy the Manager's approval criteria described in this section. The approval process includes verifying the borrower's application details, determining the value of the mortgaged property, and assessing their ability to repay the housing loan. Full valuations of the mortgaged property are obtained in relation to all housing loans.
PUMA's Product Types
Housing loans to be acquired by the Trust will have a variety of interest rate and amortisation characteristics. The interest rate and amortisation types currently approved are described below.
Interest Rate Types
Interest on housing loans is calculated on the outstanding principal balance of the housing loan on a daily basis and is capitalised to the housing loan account balance at least once a month.
Housing Loans with a variable interest rate
These are housing loans with a rate of interest which is variable at the discretion of the Issuer Trustee and the Manager. Subject to consent, all borrowers have the option to convert to a fixed rate.
Housing Loans with a fixed interest rate
These are housing loans with an interest rate that is fixed for a specified period. At the end of the fixed rate period the rate will convert to a variable rate unless the Issuer Trustee and the Manager consent at the request of the borrower to refix for a further specified period. The Manager currently allows fixed rate terms of up to 5 years.
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Amortisation Types
Amortising "Principal and Interest" Housing Loans
These are housing loans where the scheduled balance of the loan amortises over the contractual term of the loan. The interest rate under such housing loans may be a variable or a fixed rate, the features of which are described above.
"Interest Only" Housing Loans converting to Amortising "Principal and Interest" Housing Loans
These are "interest only" housing loans converting to amortising "principal and interest" housing loans after a specified date. Under these housing loans, the scheduled balance on the housing loan remains constant during an initial period of up to 5 years from settlement (i.e. the "interest only" period). The scheduled balance of the housing loan then amortises in full over the remaining contractual term of the loan. The interest rate under such housing loans may be a variable or a fixed rate, the features of which are described above.
Other Features of the Housing Loans
Each housing loan may have some or all of the features described in this section. In addition, during the term of any housing loan, the Issuer Trustee and the Manager may agree on an arm's length commercial basis to change any of the terms of that housing loan from time to time at the request of the borrower. Where any such change cannot be effected through a variation to the borrower's existing loan contract, the existing loan will be repaid and a new loan advanced pursuant to a new loan contract. In such circumstances, the loan will cease to be part of the Trust and the loan repayment will form part of Principal Collections.
"Multi Credit" or "Split Loan" Housing Loans
These are housing loan facilities which enable the loan to be divided into two or more portions. These portions generally remain separated for the life of the loan and may comprise any of the interest rate and amortisation characteristics described in the preceding section.
Offset Account Housing Loans
These are housing loan facilities which have an additional sub-account within the facility which operates (except in relation to any part of the housing loan to which a fixed rate applies) to offset the balance of that sub-account against the balance of another sub-account within the housing loan.
Switching Interest Rates
Some of the housing loans comprising the Trust will have a fixed interest rate. At the end of the fixed rate period the fixed rate applicable to those housing loans will convert to a variable rate unless the Issuer Trustee and the Manager consent to a request of the borrower to refix the rate of interest for a further specified period. The Manager may consent to extending the period for which a fixed rate of interest applies to any housing loan which was subject to a fixed rate of interest at the Closing Date or to a request by a borrower to fix the rate of interest applicable to a housing loan which was subject to a variable interest rate as at the Closing Date if certain conditions as set out under "Description of the Assets of the Trust – Acquisition of Fixed Rate Housing Loans after the Closing Date" above are satisfied. The Trust has entered into and will enter into interest rate swaps with Interest Rate Swap Provider to manage the interest rate exposure associated with fixed rate housing loans.
Substitution of Security
Borrowers may request the Manager to substitute or release a property securing a housing loan. That request may be accepted or rejected in the Manager's sole discretion.
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The Manager will only consider approving such a request if:
the relevant mortgage insurer approves; and
each of the following conditions is satisfied (where applicable):
a satisfactory valuation from a panel valuer is obtained in respect of the substitute security property unless certain specified criteria are satisfied;
the substitute security property is otherwise to the satisfaction of the Issuer Trustee, the Manager and the relevant mortgage insurer;
the substitute security property complies in all other respects with the requirements of the Manager’s credit policy;
the borrower pays all costs relating to the substitution or release of property;
the Issuer Trustee is not required to provide bridging finance;
the substitution is simultaneous with the release of the security property. In limited circumstances, the Manager will accept cash as an interim security pending a replacement security property being provided by the borrower. A security interest in favour of the Issuer Trustee is provided by the borrower over this cash security; and
if required, a permanent reduction is made in the approved maximum principal amount of the loan to achieve a LTV in accordance with the Manager’s credit policy.
Partial Loan Drawdown
Some of the housing loans acquired by the Trust may only be partially drawn down at the time of origination. For such housing loans, borrowers may, subject to certain conditions, make further drawdowns up to the scheduled principal balance. These borrowers may also, subject to certain conditions, capitalise interest payments due on the housing loan up to the scheduled principal balance.
Redraws
The majority of the housing loans acquired by the Trust will have a redraw feature. There is no limit on the number or value of housing loans in the Trust that may have this feature.
Under the redraw feature a borrower is able to redraw an amount equal to the difference between the scheduled principal balance of the housing loan and the outstanding principal balance. Borrowers may request a Redraw at any time. The Issuer Trustee may, at its discretion, refuse to allow a Redraw if a borrower is in default, the Issuer Trustee is not satisfied that the mortgage from the borrower will retain its priority or if the Issuer Trustee does not have sufficient funds available to fund that Redraw. Redraws on fixed rate housing loans are not permitted. A Redraw will not result in the housing loan being removed from the Trust.
Senior Further Advances
The Issuer Trustee will not make any Senior Further Advance in respect of a housing loan in the Trust. In the event that the borrower under a housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request, the Manager must direct the Issuer Trustee to sell that housing loan to another PUMA trust. Please refer to the "Description of the Assets of the Trust – Redraws, Senior Further Advances and Subordinate Further Advances – Funding of Senior Further Advances".
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Repayment Holiday
For certain loan types, a borrower is allowed a repayment holiday where the borrower has either prepaid principal or has only partially drawn the loan at settlement, resulting in the outstanding principal balance of the housing loan being less than the scheduled principal balance. In respect of such loan types, the housing loan will not be considered to be delinquent until the outstanding principal balance of the housing loan exceeds the scheduled principal balance.
For all other loan types to be included in the Trust, repayment holidays in respect of instalments paid in advance of the scheduled payment date may be requested by the borrower but are subject to the consent of the Manager. Where the Manager approves such a request by a borrower for a repayment holiday, direct debit arrangements or salary deductions for that borrower may be suspended in respect of each instalment paid in advance. Scheduled instalments paid in advance may, at the discretion of the Manager, become part of Collections of the Trust upon payment, or alternatively may be held by the Issuer Trustee until their scheduled payment date, at which time they will become part of the Collections of the Trust. The payment of scheduled instalments in advance will not result in the housing loan being removed from the Trust.
Early Repayment
Borrowers may discharge their housing loan early upon the repayment of all principal, accrued interest and other amounts due under the housing loan. Break costs may be payable by borrowers under fixed rate housing loans, on full and partial prepayments, to compensate the Trust for costs and losses of income arising on reinvestment of the prepaid principal during the period from the prepayment date to the scheduled maturity of the fixed rate period. However, fixed rate housing loans currently allow for early repayment by the borrower of up to 5% of the loan amount within a 12 month period, calculated by reference to the loan amount at the beginning of that 12 month period, without any break costs being payable. Additionally, some borrowers with fixed rate and/or variable rate housing loans may be charged a deferred establishment fee if they discharge their housing loan early.
Discounted Interest Rates
Some housing loans have a fixed percentage discount to the standard variable or fixed rate set by the Issuer Trustee acting on the direction of the Manager. This discount may be either for a defined period or for the complete duration of the particular housing loan.
Additional Features and New Product Types
The Manager may from time to time offer additional features in relation to a housing loan which are not described in the preceding sections, or may cease to offer features that have been previously offered, and may add, remove or vary any fees or other conditions applicable to such features.
From time to time the Manager may also introduce new housing loan products and product variations. New housing loan products and product variations developed for the PUMA Program by the Manager in the future will only be made available to existing PUMA borrowers under housing loans in this Trust on arm's length commercial terms. The Manager will, when offering new housing loan types, comply with its obligation to maintain the rating of the Notes as described in "Description of the Transaction Documents and Parties—The Trust Deed and the Management Deed—Powers of Manager" below.
If a borrower in respect of a housing loan in the Trust accepts any offer made by the Manager to add additional features to that housing loan or to otherwise vary the terms of that housing loan, and the relevant additional feature or variation are of the type which the Manager cannot agree to while that housing loan is held by the Trust, the Manager may direct the Issuer Trustee to sell that housing loan to another PUMA trust before such variation become effective.
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Origination, Settlement and Management of Housing Loans Under Constant Review by the Manager
Investors should note that the processes by which housing loans are originated, approved, settled and managed, the key features and characteristics of which are described above, are regularly reviewed by the Manager and as a result of these reviews, may change from time to time. Any changes made to these processes would be subject to the Manager's duty not to knowingly take any action that would result in a reduction or withdrawal of the ratings given to the Notes by the rating agencies.
Servicing of the Housing Loans
The Manager is responsible for servicing of the Housing Loans.
In certain circumstances, the Manager may outsource certain routine servicing duties, such as data entry and call centre functions. This does not extend to any approval and underwriting, which are undertaken by the Manager.
The Manager has in place a computerised loan management and administration system to assist in managing all housing loans in the PUMA Program. This system is used for maintaining loan records and generating accounting and fee details, as well as tracking when a loan falls into arrears and in some circumstances providing Originators with arrears reports.
Management arrangements in relation to housing loans are regularly reviewed by the Manager. Subject to the Manager's duty in relation to the ratings of existing Notes, as described under the heading "Description of the Transaction Documents and Parties—The Trust Deed and the Management Deed—Powers of Manager", changes may be made to those management arrangements at any time as a result of these reviews.
Collection and Enforcement Procedures
Pursuant to the terms of the housing loans, borrowers must make the minimum repayments due under the terms and conditions of the housing loans, on or before each repayment due date. The Manager credits repayments to a borrower's housing loan on the date of its receipt.
The PUMA Parameters currently require all payments of principal and interest under housing loans to be made directly into the Trust bank accounts. All interest payments on Notes are therefore paid directly out of payments received from the pool of housing loans supporting the Trust.
A housing loan is subject to collection action whenever a repayment is not paid by the due date. Repayment arrangements are assessed by the Manager, and if necessary, referred to the mortgage insurer. The assessment process includes a review of the delinquency history, LTV and the current financial position of the borrower. The Manager will also utilise or consider any hardship relief which is designed to assist borrowers in repayment difficulties. Where the Manager, with the consent of the mortgage insurer, has provided relief on hardship grounds, this may result in arrears being capitalised to the loan balance.
After a default by a borrower, the Manager may exercise its rights under the loan contract to commence legal proceedings, including enforcement by way of mortgagee sale.
The Issuer Trustee’s ability as mortgagee to exercise its power of sale on the mortgaged property is dependent upon the statutory restrictions of the relevant state or territory, including compliance with National Consumer Credit Legislation with respect to matters such as hardship and notice requirements. In addition, there may be factors outside the control of the mortgagee such as whether the mortgagor contests the sale, whether the mortgagor has applied to vary the terms of its mortgage on the grounds of hardship and the market conditions at the time of sale. These issues may affect the length of time between the decision of the mortgagee to exercise its power of sale and final completion of the sale.
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Arrears management procedures are regularly reviewed by the Manager. Subject to the Manager's duty in relation to the ratings of existing Notes, changes may be made to those arrangements at any time as a result of these reviews or as a result of changes to legislation and guidelines established by the relevant regulatory bodies.
The balance of each housing loan, excluding Subordinate Further Advances, in the Trust is currently covered by mortgage insurance. Therefore, default under a housing loan does not automatically lead to a loss to Noteholders. Default under a housing loan, however, may result in an accelerated prepayment of that housing loan if the underlying security property is sold pursuant to enforcement proceedings, or may lead to loss to Noteholders if, for any reason, the balance of the loan, excluding any Subordinate Further Advances, is not claimable under the relevant mortgage insurance policy.
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THE MORTGAGE INSURANCE POLICIES
General
Each housing loan acquired by the Trust will be insured by one of Genworth Financial Mortgage Insurance Pty Limited or QBE Lenders' Mortgage Insurance Limited. The mortgage insurance policy in relation to each housing loan is provided by the mortgage insurer at the time that the housing loan is originated and will be acquired by the Trust at the same time as the Trust acquires the housing loan. The insurance provided under each mortgage insurance policy covers 100% of the principal balance and any unpaid interest of the housing loan insured regardless of the LTV of that housing loan.
The mortgage insurance policies do not provide cover in relation to Subordinate Further Advances. See "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances" above for more details.
Description of the Mortgage Insurers
QBE Lenders' Mortgage Insurance Limited
QBE Lenders' Mortgage Insurance Limited (ABN 70 000 511 071) is an Australian public company registered in New South Wales and limited by shares. QBE Lenders' Mortgage Insurance Limited's principal activity is lenders' mortgage insurance which it has provided in Australia since 1965 and in New Zealand since 1988.
QBE Lenders' Mortgage Insurance Limited's parent is QBE Holdings (AAP) Pty Ltd, a subsidiary of the ultimate parent company, QBE Insurance Group Limited (QBE Group). QBE Group is an Australian based public company listed on the Australian Securities Exchange. QBE Group is recognised as Australia's largest international general insurance and reinsurance company with operations in more than 45 countries around the world, and is one of the top 20 global general insurers and reinsurers as measured by net earned premium. QBE Group currently has a counterparty credit rating by Standard & Poor's of A- (outlook negative).
As of 31 December 2013, the audited financial statements of QBE Lenders’ Mortgage Insurance Limited had total assets of A$2,324 million and shareholder’s equity of A$1,174 million. QBE Lenders’ Mortgage Insurance Limited currently has an insurer financial strength rating by Standard & Poor's of AA- (outlook negative) and Fitch Ratings of AA- (outlook stable) and by Moody’s of A2 (outlook stable). There is no assurance that the ratings will continue for any given period of time or that they will not be revised or withdrawn entirely by such rating agencies, if, in their judgment, circumstances so warrant. The ratings reflect each respective rating agency's current assessments of the creditworthiness of QBE Lenders' Mortgage Insurance Limited and its ability to pay claims on its policies of insurance. Each insurer financial strength rating of QBE Lenders' Mortgage Insurance Limited should be evaluated independently. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. Such ratings are subject to revision, qualification or withdrawal at any time by the applicable rating agency.
The business address of QBE Lenders' Mortgage Insurance Limited is 82 Pitt Street, Sydney, New South Wales, Australia, 2000.
Genworth Financial Mortgage Insurance Pty Limited
Genworth Financial Mortgage Insurance Pty Limited ACN 106 974 305 (Genworth) is a proprietary company registered in Victoria and limited by shares. Genworth's principal activity is the provision of lenders mortgage insurance which it, and predecessor businesses, have provided in Australia since 1965.
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Genworth's ultimate parent company is Genworth Mortgage Insurance Australia Limited ACN 154 890 730, which is a public company listed on the Australian Securities Exchange and registered in Victoria. Genworth Financial, Inc. has ultimate control of the majority (approximately 66% as at 22 May 2014) of the fully paid ordinary shares of Genworth Mortgage Insurance Australia Limited.
Genworth Financial, Inc. (NYSE: GNW) (Genworth Financial) is a leading Fortune 500 insurance holding company. Genworth Financial operates through three divisions: U.S. Life Insurance, which includes life insurance, long term care insurance and fixed annuities; Global Mortgage Insurance, containing U.S. Mortgage Insurance and International Mortgage Insurance segments; and the Corporate and Other division, which includes the International Protection and Runoff segments. Genworth Financial, headquartered in Richmond, Virginia, traces its roots back to 1871 and became a public company in 2004.
The business address of Genworth Financial Mortgage Insurance Pty Limited is Level 26, 101 Miller Street, North Sydney, NSW, 2060, Australia.
Primary Cover
Subject to the reductions and exclusions mentioned below and compliance with policy conditions, the insurance provided under each mortgage insurance policy covers losses and costs of the following kinds after all securities in respect of a defaulting housing loan are enforced:
any amount of principal loss arising;
any amount of interest loss at the non-default rate payable under the housing loan;
as agreed, in some cases, with the relevant mortgage insurer, any amount of break costs for a fixed rate housing loan not recovered from enforcement;
costs of sale and enforcement reasonably and necessarily incurred which are not recovered from enforcement; and
all sums properly paid by the Issuer Trustee in respect of the relevant mortgaged property for insurance premiums, rates, land tax and other statutory charges.
The insurance provided under each mortgage insurance policy covers 100% of the principal balance and, subject to certain limitations, any unpaid interest of the housing loan insured regardless of the LTV of that housing loan.
Delegated Underwriting Authority
The Manager has entered into arrangements whereby housing loans may be insured on behalf of the mortgage insurer under delegated underwriting authority, provided that they meet certain criteria.
If a housing loan is insured through delegated underwriting authority, the Manager rather than the mortgage insurer, will assess whether the housing loan meets the mortgage insurer's underwriting parameters. Other than in the event of fraud by the Manager, if an error in the assessment of a housing loan is made in good faith, the mortgage insurer has agreed not to cancel or avoid the insurance policy or reduce its liability for any claim under the insurance policy on the basis of that error alone.
Reductions
The amount of a claim under a mortgage insurance policy may be reduced in some circumstances. These include a reduction by the amount of:
the proceeds of the sale of the mortgaged property;
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all monies received for rents and profits in respect of the mortgaged property and by way of compensation for resumption, compulsory acquisition or the like in respect of any part of the mortgaged property;
any monies received by way of the proceeds of payment of any insurance policy or the refund of any premium in respect of the mortgaged property;
all monies received from the enforcement of any collateral security or from any surety or guarantor of the mortgage or, in some cases, the market value of any such security if foreclosed;
any other monies received by the insured from any source in reduction of the amount due under the mortgage;
the estimated cost of restoration or repairs of the buildings and the mortgaged property itself to their condition as at the commencement of the policy, reasonable wear and tear excepted, free of any contamination, pollution or environmental hazard and free of any actual and contingent liability for the cost of reducing, eliminating or cleaning up any contamination, pollution or environmental hazard;
any stamp duty included in the housing loan;
if the valuer - upon whose valuation the insured relied in respect of the housing loan - was negligent or in breach of a duty of care, but the valuer is not liable to the insured, or the valuer's liability is reduced by contributory negligence on the part of the insured the amount for which the valuer would have been liable by reason of any act or omission of the insured or the amount of the reduction for contributory negligence (as applicable);
any loss which is a result of the negligence of the insured in the preparation, administration or management of an insured mortgage or a housing loan account, in the protection of any mortgaged property or the insured's interest in that property or in the exercise of the remedies of the insured as mortgagee on default under the insured mortgage;
any amount payable by the insured to discharge any mortgage or other security that has priority over the insured mortgage (other than where that prior security has been consented to by the insurer or constitutes a statutory charge); and
the amount by which the insured's loss is increased due to the happening of any of the events below, without the prior consent of the insurer:
the creation of any lease, license, easement, restriction or other notification affecting any mortgaged property;
the creation of any further mortgage, charge or encumbrance over any part of the mortgaged property, except under any statute, regulation or ordinance in respect of the non-payment of any rates, taxes or other charges;
the insured mortgage not, or not fully, securing any applicable break costs or early repayment fee;
any alteration in an insured mortgage, other than an increase in the amount of instalments payable under the insured mortgage, which has the consequence of materially increasing or accelerating payment of the relevant housing loan account or the exposure of the insurer;
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any material derogation, relinquishment, abandonment, compromise, waiver or discharge of the insured's rights against any borrower, the mortgaged property, any security provider or in respect of a housing loan;
any failure to fully and accurately disclose the happening of any material event or circumstance relating to the housing loan account;
the failure by the insured to submit a claim for loss as required by the policy;
the insured entering into possession, selling, taking foreclosure action or appointing any receiver or Manager in respect of the mortgaged property; and
the insured making a false or misleading statement, assurance or representation to the borrower or any guarantor.
Exclusions
A mortgage insurance policy may not cover losses arising as a result of, among other things:
any claim that is made fraudulently;
the liability of the Issuer Trustee as mortgagee or mortgagee in possession under any environmental legislation;
the fraud of any person (other than the borrower or any security provider) including (without limitation) the insured, the Originator, the Manager or any of their respective employees, agents or contractors;
the payment of any fine, further penalty or liability to pay damages or compensation of any kind;
a mortgage which, at the time the claim is made, is not managed by an Originator or the Manager;
war, invasion, insurrection, act of foreign enemy, hostilities (whether war is declared or not), rebellion, revolution or like events;
government or local authority confiscation, nationalisation, requisition, destruction or damage of any property securing a housing loan;
the use, existence or escape of nuclear weapons material or ionising radiations from or contamination by radioactivity from any nuclear waste from the combustion of nuclear fuel, including nuclear fusion;
the existence or escape of any pollution or environmentally hazardous material;
refusal or failure to comply with reasonable directions of the mortgage insurer;
the breach of any condition or warranty in the policy by the Issuer Trustee as the insured or the Manager or Originator;
the housing loan or any security in respect of the housing loan (including the mortgage) becoming invalid, unenforceable or losing priority;
any loss, damage or destruction to the mortgaged property (excluding reasonable wear and tear). In this regard the Trust relies on insurance coverage under the general insurance policies which borrowers are required to hold and keep current;
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any defence, right of set-off or counterclaim by the borrower against the insured, or any derogation from the insured's rights against the mortgagor or the mortgaged property or in respect of the loan by compromise, postponement, partial discharge or otherwise;
a further encumbrance being created on the mortgaged property without the consent of the relevant mortgage insurer;
a Senior Further Advance being advanced to the borrower without the consent of the relevant mortgage insurer;
a reopening of the housing loan in the manner contemplated by Section 70 of the Consumer Credit Code and section 76 of the National Credit Code. This section empowers a court to reopen transactions giving rise to a contract, mortgage or guarantee or a change thereto, if satisfied that, in the circumstances when it was entered into or changed, it was unjust;
the non-observance or non-performance in all material respects of all the obligations imposed by any relevant property law on an insured as mortgagee, including as mortgagee in possession, or the making or taking of or the terms of the mortgage or any collateral security contravening any relevant legislation applicable to the provision of credit and the granting of mortgages; or
the valuation report in respect of the mortgaged property not being addressed to or not stating that it may be relied upon by the insured and the relevant mortgage insurer.
Further, a mortgage insurer may reduce claims payable based on the extent to which the rights of the Issuer Trustee to the housing loan or the property securing the housing loan have been reduced as a result of the negligence of the Issuer Trustee, the Originator or the Manager. In this regard, Originators are required under the current PUMA Parameters to hold current professional indemnity insurance.
In addition, under the Insurance Contracts Act 1984 (Cth), a prospective insured has a duty to disclose to the insurer every matter known to the insured, or which could reasonably be expected to be known by the insured, relevant to the insurer's decision whether to accept the risk of the insurance and, if so, on what terms. The duty also applies in respect of a renewal, extension, variation or reinstatement of a contract of general insurance. If the insured fails to comply with the duty of disclosure and the non-disclosure is fraudulent, the insurer may be able to avoid the policy from the beginning.
Where the non-disclosure is not fraudulent, the insurer may be able to reduce its liability under the policy in respect of a claim by the amount that would place the insurer in a position in which the insurer would have been if the non-disclosure had not occurred.
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DESCRIPTION OF THE NOTES
Issuance of Notes
Notes
The Issuer Trustee can issue Notes under the terms of the Trust Deed and the Sub-Fund Notice.
Initial Notes will be issued in one or more of the following three classes:
Class A Notes;
Class B1 Notes; and
Class B2 Notes.
If issued, the Refinancing Notes may be issued as Class A-R Notes and/or Class B1-R Notes.
The information in this section, "Description of the Notes", is only a summary of details applicable (or which may be applicable) to the Notes.
Form of the Notes and the Register
Noteholder Acknowledgements
No global definitive certificate or other instrument will be issued to evidence a person's title to Notes. Instead, each Noteholder will be issued with a Noteholder Acknowledgement under which the Issuer Trustee acknowledges that the Noteholder has been entered in the register in respect of the Notes referred to therein. A Noteholder Acknowledgement is not a certificate of title as to the relevant Notes. It cannot, therefore, be pledged or deposited as security nor can Notes be transferred by delivery of only a Noteholder Acknowledgement to a proposed transferee.
If a Noteholder Acknowledgement becomes worn out or defaced, then upon production of it to the Issuer Trustee, a replacement will be issued. If a Noteholder Acknowledgement is lost or destroyed, and upon proof of this to the satisfaction of the Issuer Trustee and the provision of such indemnity as the Issuer Trustee considers adequate, a replacement Noteholder Acknowledgement will be issued. A fee not exceeding A$10 may be charged by the Issuer Trustee for a new Noteholder Acknowledgement.
The Register of Noteholders
The Issuer Trustee will maintain the register at an office in Sydney.
The register will include, amongst other things, the names and addresses of the Noteholders and a record of each payment made in respect of the Notes.
The register is conclusive evidence of the title of a person recorded in it as the holder of a Note. The Issuer Trustee may from time to time close the register for a period not exceeding 30 Business Days in aggregate in any calendar year (or such greater period as agreed between the Issuer Trustee and the Manager).
In addition to the above period, the register will be closed by the Issuer Trustee for the purpose of calculating entitlements to interest and principal from the close of business on the day which is 3 Business Days prior to the relevant Monthly Payment Date and will reopen at commencement of business on the Business Day immediately after that date. On each Monthly Payment Date, principal and interest due on the Notes, if any,
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will be paid to the corresponding Noteholders whose names appear in the register when the register is closed prior to that Monthly Payment Date.
The register may be inspected by a Noteholder during normal business hours in respect of information relating to that Noteholder only. Copies of the register may not be taken.
Transfer of Notes
A Noteholder is only entitled to transfer any Notes if:
the aggregate consideration payable by each transferee is at least A$500,000 (calculated in accordance with section 708(9) of the Corporations Act and Regulation 7.1.18 of the Corporations Regulations) (or its equivalent in other currencies, disregarding moneys lent by the offeror or its associates) or the offer for sale or invitation to purchase to the proposed transferee by the Noteholder is not an offer or invitation that requires disclosure to investors under Part 6D.2 of the Corporations Act;
the transfer is not made to a person who is a Retail Client; and
the transfer does not require any document to be lodged with ASIC and complies with all applicable laws, regulations and directives.
All transfers of Notes must be effected by a Note Transfer and Acceptance. Note Transfer and Acceptances are available from the Issuer Trustee's registry office. Every Note Transfer and Acceptance must be duly completed, duly stamped (if applicable), executed by the transferor and the transferee and lodged for registration with the Issuer Trustee accompanied by the Noteholder Acknowledgement to which it relates.
For the purposes of accepting a Note Transfer and Acceptance, the Issuer Trustee is entitled to assume that it is genuine and signed by the transferor and transferee with appropriate authority.
The Issuer Trustee is authorised to refuse to register any Note Transfer and Acceptance which is not duly executed or which would result in a contravention of or a failure to observe:
the terms of the Trust Deed or sub-fund notice; or
a law of the Commonwealth of Australia or of a State or Territory of the Commonwealth of Australia,
or which would result in an obligation to procure registration or approval of the transfer by any Commonwealth or State regulatory body. The Issuer Trustee is not bound to give any reason for refusing to register any Note Transfer and Acceptance and its decision is final, conclusive and binding.
A Note Transfer and Acceptance will be deemed to take effect, subject to a refusal by the Issuer Trustee to register it, at the beginning of the Business Day that the Note Transfer and Acceptance is actually received by the Issuer Trustee. However, if a Note Transfer and Acceptance is actually received by the Issuer Trustee after 4.00 pm (Sydney time) on a Business Day, it will be regarded as having been received by the Issuer Trustee on the next Business Day. If a Note Transfer and Acceptance is received by the Issuer Trustee during any period when the register is closed for any purpose the Note Transfer and Acceptance will be regarded as having been received by the Issuer Trustee on the first Business Day thereafter on which the register is open.
The Issuer Trustee must register the transferee in the register upon receipt (as set out above). The registration in the register of a Note Transfer and Acceptance will constitute passing of title in the Note to the transferee.
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Upon registration of a Note Transfer and Acceptance, the Issuer Trustee will issue a Noteholder Acknowledgement to the transferee in respect of the relevant Notes and, where applicable, issue to the transferor a Noteholder Acknowledgement for the balance of the Notes retained by the transferor.
Marked Note Transfer and Acceptance
A Noteholder may request the Issuer Trustee to provide a marked Note Transfer and Acceptance in relation to Notes. Once a Note Transfer and Acceptance has been marked by the Issuer Trustee, for a period of 90 days thereafter (or such other period as the Manager and the Issuer Trustee agree) the Issuer Trustee will not register any transfer of the Notes described in the Note Transfer and Acceptance other than that marked Note Transfer and Acceptance.
Lodgement of Class A Notes, Class B1 Notes and Class B2 Notes in Austraclear
It is intended that the Class A Notes, the Class B1 Notes and the Class B2 Notes will be lodged in Austraclear after issue. It is also intended that the Class A Notes, the Class B1 Notes and the Class B2 Notes will be lodged with Austraclear on the basis that they will not be uplifted.
Once the Class A Notes, the Class B1 Notes and the Class B2 Notes are lodged into the Austraclear system, Austraclear will become the registered holder of those Class A Notes, the Class B1 Notes and the Class B2 Notes in the register to be maintained by the Issuer Trustee. While those Class A Notes, Class B1 Notes and Class B2 Notes remain in the Austraclear system:
all payments and notices required of the Issuer Trustee and the Manager in relation to those Class A Notes, Class B1 Notes and Class B2 Notes will be directed to Austraclear; and
all dealings and payments in relation to those Class A Notes, Class B1 Notes and Class B2 Notes within the Austraclear system will be governed by the Austraclear Regulations.
Austraclear and Cross-Trading with Euroclear and Clearstream, Luxembourg
Subject to the rules of the relevant clearing and settlement system, Noteholders may elect to hold interests in Notes (i) directly through the Austraclear System, (ii) indirectly through Euroclear or Clearstream, Luxembourg if they are participants in such systems or (iii) indirectly through organisations which are participants in the Austraclear System, Euroclear or Clearstream, Luxembourg. The Manager has been advised that Euroclear and Clearstream, Luxembourg will hold interests on behalf of their participants through customers' securities accounts in their respective names on the books of their respective Australian sub-custodians, which in turn will hold such interests in customers' securities accounts in the names of the Australian sub-custodians. The rights of a holder of interests in Notes held through Euroclear or Clearstream, Luxembourg are subject to the respective rules and regulations for accountholders of Euroclear or Clearstream, Luxembourg, the terms and conditions of agreements between Euroclear and Clearstream, Luxembourg and their respective nominee and the Austraclear Regulations. Participants in any of such systems should contact the relevant clearing system(s) if they have any questions in relation to clearing, settlement and cross-market transfers and/or trading.
Listing on ASX
The Manager may in its absolute discretion, at any time on or after the Closing Date, make an application for the Notes of any Class to be listed on the ASX. If any such application is made, it is wholly at the discretion of the ASX whether to accept the application to list the relevant Class of Notes. Any such listing is subject to the ASX Listing Rules and the ASX Market Rules and may be subject to any other conditions imposed by the ASX.
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Notices to Noteholders
Notices, requests and other communications by the Issuer Trustee or the Manager to Noteholders may be made by:
in the case of a notice, request and other communication to any Noteholder, advertisement placed on a Business Day in The Australian Financial Review (or other nationally delivered newspaper); or
any other means of communication allowed by the Trust Deed (including delivery, prepaid post or facsimile) to the extent that the requisite details of the Noteholder are discernable from the register.
If the Notes become the subject of a dedicated page of the Reuters System (or other electronic market information system generally used in Australian financial markets) notifications to Noteholders will be made on that dedicated page.
Method of Payment
Any amounts payable by the Issuer Trustee to a Noteholder will be paid in Australian dollars and will be paid:
by electronic transfer through Austraclear;
by payment to a bank account in Australia of the payee nominated by the payee as recorded in the register; or
any other manner specified by the Noteholder and agreed to by the Issuer Trustee.
Interest on the Notes
Accrual of interest on the Notes
Each Note accrues interest from the Closing Date on a daily basis and ceases to accrue interest from (and including) the earlier of:
(a) the date upon which the Invested Amount of that Note is reduced to zero and all accrued interest in respect of that Note is paid in full; and
(b) the date upon which the Note is deemed to be redeemed. See "—Redemption of the Notes— Redemption upon Final Payment" below.
Class A Notes, Class B1 Notes and Class B2 Notes
The interest rates for a Monthly Period for any Class A Notes, any Class B1 Notes and any Class B2 Notes will be equal to the one month Bank Bill Rate for that Monthly Period plus the Margin in relation to that Note. The interest rate for an Initial Note is calculated by the Manager.
The margin for the Class A Notes and the Class B1 Notes will increase by 0.50% per annum from and including the Scheduled Maturity Date. The Scheduled Maturity Date is the Monthly Payment Date falling in July 2019.
Interest is calculated for a Class A Note, a Class B1 Note or a Class B2 Note as the product of:
the Invested Amount of that Initial Note as of the close of business on the first day of the relevant Monthly Period, after giving effect to any payments of principal made with respect to that Initial Note on that day;
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the interest rate for that Initial Note for that Monthly Period; and
the actual number of days in that Monthly Period based on a 365 day year,
and is payable in arrears on each Monthly Payment Date from the funds available for this purpose in accordance with the sub-fund notice (see "Description of the Cashflows of the Trust — Distribution of the Available Income Amount" below).
If the first Monthly Period in relation to a Class A Note, a Class B1 Note or a Class B2 Note is greater than one month, then the Manager will determine the Bank Bill Rate for that period by straight-line interpolation by using the next shorter and the next longer Bank Bill Rates then available.
Interest on the Refinancing Notes
If Refinancing Notes are issued, the interest rates for a Monthly Period for any Refinancing Notes will be equal to the one month Bank Bill Rate for that Monthly Period plus a margin to be determined at a later date and notified by the Manager to the Issuer Trustee before the relevant Refinancing Closing Date.
Interest on Unpaid Interest
Interest will accrue on any unpaid interest in relation to a Note at the interest rate that applies from time to time to that Note until that unpaid interest is paid.
Redemption of the Notes
Partial Redemption of the Notes on Monthly Payment Dates
On each Monthly Payment Date, the Issuer Trustee must pay pari passu and rateably:
to the Noteholders of the Class A Notes until the Stated Amount of the Class A Notes is reduced to zero, pari passu and rateably between them, the amount, if any, allocated to repayment on that Monthly Payment Date of principal on those Class A Notes; and
to the Noteholders of the Class A-R Notes until the Stated Amount of the Class A-R Notes is reduced to zero, pari passu and rateably between them, the amount, if any, allocated to repayment on that Monthly Payment Date of principal on those Class A-R Notes.
On each Monthly Payment Date, the Issuer Trustee must pay pari passu and rateably:
to the Noteholders of the Class B1 Notes until the Stated Amount of the Class B1 Notes is reduced to zero, pari passu between them, the amount, if any, allocated to repayment on that Monthly Payment Date of principal on those Class B1 Notes; and
to the Noteholders of the Class B1-R Notes until the Stated Amount of the Class B1-R Notes is reduced to zero, pari passu between them, the amount, if any, allocated to repayment on that Monthly Payment Date of principal on those Class B1-R Notes.
On each Monthly Payment Date, until the Stated Amount of the Class B2 Notes is reduced to zero, the Issuer Trustee must pay to the Noteholders of those Class B2 Notes, pari passu between them, the amount, if any, allocated to repayment on that Monthly Payment Date of principal on those Class B2 Notes. For a description of the allocation of available funds to repayment of principal on the Notes see "Description of the Cashflows of the Trust—Distribution of the Available Principal Amount" below.
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Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date
On any Monthly Payment Date falling on or after the Scheduled Maturity Date the Manager may, but is not obliged to, direct the Issuer Trustee to redeem all, but not some only, of the Class A Notes in full and/or redeem all, but not some only, of the Class B1 Notes in full at their then Invested Amounts, together with all accrued but unpaid interest to the date of redemption by applying the proceeds of the issue of any Refinancing Notes in the following order of priority:
(a) first, to the Class A Noteholders towards repayment of principal of the Class A Notes (together with any accrued but unpaid interest on the Class A Notes up to but excluding the relevant Refinancing Closing Date) on a pari passu and rateable basis until the Invested Amount of the Class A Notes is reduced to zero; and
(b) second, if the Manager has exercised its option to require the Issuer Trustee to redeem the Class B1 Notes, to the Class B1 Noteholders towards repayment of principal of the Class B1 Notes (together with any accrued but unpaid interest on the Class B1 Notes up to but excluding the relevant Refinancing Closing Date) on a pari passu and rateable basis until the Invested Amount of the Class B1 Notes is reduced to zero; and
(c) finally, the balance, if any, to be retained by the Issuer Trustee as Collections and applied in accordance with the waterfalls set out in “Description of the Cashflows of the Trust" below on the next Monthly Payment Date after that Refinancing Closing Date.
In exercising the call option described above, the Manager may elect to have both the Class A Notes and the Class B1 Notes redeemed on the same Monthly Payment Date or to have the Class A Notes redeemed on a particular Monthly Payment Date and the Class B1 Notes redeemed on a subsequent Monthly Payment Date, however the Class B1 Notes may not be redeemed pursuant to the call option described above prior to the Class A Notes being redeemed.
In exercising the call option described above, the Manager may market (but is not obliged to market):
Class A-R Notes to be issued on the Scheduled Maturity Date or on any Monthly Payment Date thereafter (as determined by the Manager and notified by the Manager to the Issuer Trustee, the Class A Note Refinancing Closing Date) with such aggregate Initial Invested Amounts as the Manager determines is required to refinance the Class A Notes and (if the Manager elects) the Class B1 Notes, outstanding on the relevant Refinancing Closing Date; and
Class B1-R Notes to be issued on the Scheduled Maturity Date or on any Monthly Payment Date thereafter (as determined by the Manager and notified by the Manager to the Issuer Trustee, the Class B1 Note Refinancing Closing Date) with such aggregate Initial Invested Amounts as the Manager determines is required to refinance the Class B1 Notes outstanding on the relevant Refinancing Closing Date.
The Manager must send notice of such a redemption to the relevant Noteholders not less than 7 Business Days prior to the relevant Monthly Payment Date. Such a notice once given is irrevocable and binding upon the Manager.
Optional Redemption of all Notes on or after the Call Date
On any Monthly Payment Date falling on or after the Call Date the Manager may, but is not obliged to, direct the Issuer Trustee to redeem all, but not some only, of the Notes in full at their then Invested Amounts, together with all accrued but unpaid interest to the date of redemption by applying the Collections available on that Monthly Payment Date, including without limitation the proceeds of a sale of all (but not some only) of the mortgages held by the Issuer Trustee together with all housing loans, collateral securities and other
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rights and entitlements relating thereto (together, the Mortgage Loan Rights) by the Issuer Trustee to one or more other warehouse funds or sub-funds established pursuant to the PUMA Programme. The Issuer Trustee has the power to transfer Mortgage Loan Rights to one or more other warehouse funds or sub-funds established pursuant to the PUMA Programme following such direction by the Manager for the purpose of redeeming the Notes provided that such transfer would yield sufficient proceeds to redeem the Notes.
The Manager must send notice of such a redemption to the Noteholders not less than 7 Business Days prior to the relevant Monthly Payment Date. Such a notice once given is irrevocable and binding upon the Manager.
Final Maturity Date
Unless previously redeemed, the Issuer Trustee must redeem the Notes in full by paying the Invested Amount, together with all accrued and unpaid interest, in relation to each Note on or by the Monthly Payment Date falling in October 2045.
Event of Default and Enforcement
If an event of default occurs under the security trust deed, the Security Trustee upon becoming aware of the event of default and subject to certain exceptions and conditions, including the requirement in most circumstances of an Extraordinary Resolution of Secured Creditors, must enforce the Security created by the security trust deed. That enforcement can include the sale of some or all of the housing loans. Any proceeds from the enforcement of the Security will be applied in accordance with the order of priority of payments as set out in the security trust deed. See "Description of the Transaction Documents and Parties—The Security Trust Deed—Priorities under the Security Trust Deed" below.
Redemption upon Final Payment
Upon final distribution being made in respect of any Notes in accordance with the order of priority of payments as set out under the heading "Description of the Cashflows of the Trust—Distribution of the Available Principal Amount" below or, following enforcement of the Security granted under the security trust deed, in accordance with the order of priorities as set out under the heading "Description of the Transaction Documents and Parties—The Security Trust Deed—Priorities under the Security Trust Deed" or following termination of the Trust, those Notes will be deemed to be redeemed and discharged in full and any obligation to pay any accrued but unpaid interest or the Invested Amount in relation to the Notes will be extinguished in full.
No Payments of Principal in Excess of Stated Amount
No amount of principal will be repaid in respect of a Note in excess of its Stated Amount (other than in accordance with the Security Trust Deed).
Governing Law
The Notes will be governed by the laws of New South Wales.
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DESCRIPTION OF THE CASHFLOWS OF THE TRUST
Principles Underlying the Cashflows
The sub-fund notice of the Trust provides for the Available Income Amount and the Available Principal Amount in relation to the housing loans, and other amounts received by the Issuer Trustee, to be allocated on a monthly basis in accordance with a set order of priorities to satisfy the Issuer Trustee's payment obligations in relation to the Trust.
Key Dates and Periods
The following are the relevant dates and periods for the allocation of cashflows and their payments.
Monthly Payment Date the 18th day of each calendar month up to and including the Final Maturity Date, provided that where any of these dates is not a Business Day, the Monthly Payment Date will be the next following Business Day. The first Monthly Payment Date is 18 August 2014.
Monthly Period each period from and including a Monthly Payment Date to but excluding the next Monthly Payment Date except that the first monthly period is the period from and including the Closing Date to but excluding the first Monthly Payment Date.
Collection Period (a) with respect to the first Determination Date, the period commencing on (and including) the Closing Date and ending on the last day of the calendar month immediately preceding the first Determination Date; and
(b) with respect to each subsequent Determination Date, the calendar month immediately preceding that Determination Date.
Example Calendar
The following example calendar for a month assumes that the Closing Date occurs on 16 July 2014, that all references are to Sydney time and all week days are Business Days:
First Collection Period 16 July 2014 (inclusive) to 31 July 2014 (inclusive)
First Monthly Period 16 July 2014 (inclusive) to 18 August 2014 (exclusive)
First Monthly Payment Date 18 August 2014
Second Collection Period 1 August 2014 (inclusive) to 31 August 2014 (inclusive)
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Second Monthly Period 18 August 2014 (inclusive) to 18 September 2014 (exclusive)
Second Monthly Payment Date 18 September 2014
Third Collection Period 1 September 2014 (inclusive) to 30 September 2014 (inclusive)
Third Monthly Period 18 September 2014 (inclusive) to 20 October 2014 (exclusive)
Third Monthly Payment Date 20 October 2014
Determination of the Available Income Amount
On each Determination Date, the Manager will determine the payments and allocations to be made by the Issuer Trustee from the Available Income Amount for the Collection Period just ended.
The Available Income Amount in relation to a Collection Period and the Determination Date immediately following the end of that Collection Period is an amount equal to the aggregate of (without double counting) the following, as determined by the Manager:
the lesser of:
Collections for that Collection Period; and
Finance Charge Collections for that Collection Period;
that amount of interest received on the Account relating to the Trust and all amounts of interest or income received on the Authorised Investments during the immediately preceding Collection Period;
all net amounts receivable by the Issuer Trustee from the Interest Rate Swap Provider under the Interest Rate Swap on the immediately following Monthly Payment Date;
the Principal Draw in relation to that Determination Date;
the Liquidity Reserve Draw in relation to that Determination Date; and
any other amounts received by the Issuer Trustee in that Collection Period which the Manager determines are in the nature of income,
but excluding for the avoidance of doubt:
all amounts of accrued interest or arrears of interest payable under or in respect of any purchase or any transfer of any of the housing loans pursuant to the Transaction Documents during the period (including any Accrued Interest Adjustment); and
any Prepayment Amount or interest or other income earned on a Prepayment Amount (unless otherwise provided in the relevant Transaction Document).
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The Collections in relation to a Collection Period are the aggregate of the following amounts (without double counting) in respect of housing loans then forming part of the assets of the Trust:
A less the sum of (B + C) where:
A = the sum of amounts for which a credit entry is made during the period to the accounts established in the records for those housing loans;
B = amounts for which a credit entry is made to the accounts established in the records for those housing loans which relates to any Defaulted Amount on those housing loans during the period; and
C = reversals made during the period to the accounts established in the records in respect of those housing loans where the original credit entry (or part thereof) was made in error or was made but subsequently reversed due to funds not being cleared;
any Recoveries received by the Issuer Trustee under or in respect of the housing loans during that period (less any reversals made during the period in respect of Recoveries where the original debit entry (or part thereof) was in error);
all amounts received under or in respect of any sale or transfer of any of the housing loans pursuant to the Transaction Documents during the period;
any amount in respect of damages or pursuant to an indemnity received by the Issuer Trustee as a result of a breach of any representation or warranty or undertaking by any party to the Transaction Documents;
any insurance proceeds received during the period by the Issuer Trustee in accordance with any mortgage insurance policy or any insurance policy;
from Originators under Mortgage Origination Deeds (as defined in the Management Deed);
of income from any Authorised Investments (other than the housing loans); and
of proceeds of issue of Notes and Units in the Trust which, in either case, have not been applied by the Issuer Trustee towards the acquisition of housing loans or towards funding of the Liquidity Reserve on the Closing Date, or towards redeeming the Class A Notes or the Class B1 Notes in the circumstances described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date" above,
but excluding, for the avoidance of doubt:
any amount debited during the period to the accounts established in the records for those housing loans representing fees or charges imposed by any governmental agency, bank accounts debits tax or similar tax or duty imposed by any governmental agency (including any tax or duty in respect of payments or receipts to or from bank or other accounts) or insurance premiums paid.
The Finance Charge Collections in relation to a Collection Period means the aggregate of the following amounts (without double counting) as determined by the Manager during that Collection Period in respect of the housing loans then forming part of the assets of the Trust:
(a) the aggregate of:
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(i) all debit entries representing interest or other charges that have been charged during that period made to the accounts established in the records for those housing loans;
(ii) subject to paragraph (iii), any Mortgagor Break Costs charged in relation to those housing loans during a prior period and received by the Issuer Trustee during that period; and
(iii) any amounts received by the Issuer Trustee during that period from the enforcement of any housing loans or in accordance with any mortgage insurance policy in relation to those housing loans, where such amounts:
(A) exceed the aggregate of the costs of enforcement of any such housing loan and the interest and principal then outstanding on the related loans in respect of which the amounts are received; and
(B) represent part or all of the Mortgagor Break Costs charged during a prior period on those housing loans in respect of which the amounts are received,
less the aggregate of:
(iv) any reversals made during that period in respect of interest or other charges in relation to any of the accounts established in the records for those housing loans where the original debit entry (or part thereof) was in error;
(v) any Mortgagor Break Benefits paid to a Mortgagor in relation to those housing loans during that period; and
(vi) any Mortgagor Break Costs charged to the accounts established in the records for those housing loans during that period that have not been received by the Issuer Trustee during that period;
(b) any Recoveries received by the Issuer Trustee under or in respect of housing loans during that period (less any reversals made during the period in respect of Recoveries where the original debit entry (or part thereof) was in error); and
(c) all amounts of accrued interest or arrears of interest received under or in respect of any sale or transfer of any of the housing loans pursuant to the Transaction Documents during the period; and
(d) any amount in respect of damages or pursuant to an indemnity received by the Issuer Trustee as a result of a breach of any representation or warranty or undertaking by any party to the Transaction Documents which represents amounts on account of interest, as determined by the Manager,
but excluding, for the avoidance of doubt:
(e) any amount debited during the period to the accounts established in the records for those housing loans representing fees or charges imposed by any governmental agency, bank accounts debits tax or similar tax or duty imposed by any governmental agency (including any tax or duty in respect of payments or receipts to or from bank or other accounts) or insurance premiums paid; and
(f) an amount equal to the amount of proceeds from the issuance of the Notes applied towards payment of the Adjustment Advance on the Closing Date.
Payments of accrued interest to disposing PUMA trust
Provided that the Issuer Trustee did not pay an Adjustment Advance on the Closing Date, the Manager will determine the amount of interest which accrued in respect of each housing loan acquired by and transferred
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to the Trust on the Closing Date during the period from (and including) the last date on which interest was debited to the corresponding account for each such housing loan up until (but excluding) the Closing Date (the Accrued Interest Adjustment) and notify the Issuer Trustee of such determination. The Issuer Trustee will, in accordance with the instructions of the Manager, pay the Accrued Interest Adjustment to the disposing PUMA trust on any date determined by the Manager.
Distribution of the Available Income Amount
On each Determination Date, the Manager must determine the Available Income Amount for distribution by the Issuer Trustee on the next Monthly Payment Date from the Available Income Amount for the Collection Period just ended and must direct the Issuer Trustee to apply the Available Income Amount on that Monthly Payment Date in the following order of priority:
(a) first, at the Manager's discretion, up to A$10 to the Income Unitholders, pari passu and rateably, to be dealt with, and held by, the Income Unitholders;
(b) second, in payment or allocation, pari passu and rateably, towards:
(i) any amounts payable by the Issuer Trustee to itself as trustee of the Trust and the Security Trustee;
(ii) any liability of the Issuer Trustee for Taxes; and
(iii) any other Fees and Expenses payable to parties (including to the Issuer Trustee in any other capacity or the Security Trustee in any other capacity) and incurred without breach by the Issuer Trustee of the Transaction Documents to which it is a party (and for which payment has not been provided for elsewhere),
and to provide for any such amounts expected to become due and payable by the Issuer Trustee in the Collection Period in which such Monthly Payment Date occurs;
(c) third, in payment towards the Manager's fee if any;
(d) fourth, in or towards payment on the Monthly Payment Date of any amounts due and payable to the Interest Rate Swap Provider in respect of the Interest Rate Swaps (including any termination payment due and payable by the Issuer Trustee under the Interest Rate Swaps but excluding any relevant Excluded Swap Termination Amount) (except to the extent that such amounts have been paid out of any premium received from any replacement Interest Rate Swap Provider) pursuant to the Interest Rate Swap Master Agreement;
(e) fifth, in payment pari passu and rateably:
(i) if any Class A Notes remain outstanding, to the Class A Noteholders pari passu and rateably, towards interest (if any) due on the Class A Notes on that Monthly Payment Date and any unpaid interest on the Class A Notes from prior Monthly Payment Dates and interest on such unpaid interest;
(ii) if any Class A-R Notes remain outstanding, to the Class A-R Noteholders, pari passu and rateably, towards interest (if any) due on the Class A-R Notes on that Monthly Payment Date and any unpaid interest on the Class A-R Notes from prior Monthly Payment Dates and interest on such unpaid interest; and
(iii) to the redraw facility provider towards an amount not exceeding the Senior Redraw Facility Interest Amount in respect of interest and fees due on the redraw facility on that Monthly
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Payment Date and any unpaid interest and fees on the redraw facility from prior Monthly Payment Dates and interest on such amounts;
(f) sixth, in payment pari passu and rateably:
(i) if any Class B1 Notes remain outstanding, to the Class B1 Noteholders, towards interest (if any) due on the Class B1 Notes on that Monthly Payment Date and any unpaid interest on the Class B1 Notes from prior Monthly Payment Dates and interest on such unpaid interest; and
(ii) if any Class B1-R Notes remain outstanding, to the Class B1-R Noteholders, pari passu and rateably, towards the interest (if any) due on the Class B1-R Notes on that Monthly Payment Date and any unpaid interest on the Class B1-R Notes from prior Monthly Payment Dates and interest on such unpaid interest;
(g) seventh, in payment towards the amount (if any) by which the Required Liquidity Reserve exceeds the then Liquidity Reserve (after the payments and allocations referred to above), to be retained by the Issuer Trustee as additional Liquidity Reserve as described in "—Liquidity Reserve" below;
(h) eighth, an amount equal to the Unreimbursed Principal Draw in relation to that Determination Date will be allocated to the Available Principal Amount for the Collection Period just ended;
(i) ninth, an amount equal to the Defaulted Amount in respect of the Collection Period just ended will be allocated to the Available Principal Amount for the Collection Period just ended;
(j) tenth, in payment pari passu and rateably of:
(i) if any Class A Notes remain outstanding, an amount equal to any Class A Charge-Offs remaining unreimbursed from all prior Monthly Payment Dates will be allocated to the Available Principal Amount for the Collection Period just ended; and
(ii) if any Class A-R Notes remain outstanding, an amount equal to any Class A-R Charge-Offs remaining unreimbursed from all prior Monthly Payment Dates will be allocated to the Available Principal Amount for the Collection Period just ended;
(k) eleventh, in payment pari passu and rateably of:
(i) if any Class B1 Notes remain outstanding, an amount equal to any Class B1 Charge-Offs remaining unreimbursed from all prior Monthly Payment Dates will be allocated to the Available Principal Amount for the Collection Period just ended; and
(ii) if any Class B1-R Notes remain outstanding, an amount equal to any Class B1-R Charge-Offs remaining unreimbursed from all prior Monthly Payment Dates will be allocated to the Available Principal Amount for the Collection Period just ended;
(l) twelfth, in payment pari passu and rateably an amount equal to any Class B2 Charge-Offs remaining unreimbursed from all prior Monthly Payment Dates will be allocated to the Available Principal Amount for the Collection Period just ended;
(m) thirteenth, in payment to the redraw facility provider towards the balance of any Redraw Facility Interest on that Monthly Payment Date, any amounts payable in relation to increased costs to the redraw facility provider under the redraw facility on that Monthly Payment Date and any such amounts remaining unpaid from prior Monthly Payment Dates;
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(n) fourteenth, in payment towards the amount (if any) by which the Required Extraordinary Expenses Reserve exceeds the then Extraordinary Expenses Reserve (after any application of the Extraordinary Expenses Reserve towards Extraordinary Expenses as required on that Monthly Payment Date) to be allocated to the Extraordinary Expenses Reserve;
(o) fifteenth, in payment to the Class B2 Noteholders pari passu and rateably, towards interest (if any) due on the Class B2 Notes on that Monthly Payment Date and any unpaid interest on the Class B2 Notes from prior Monthly Payment Dates and interest on such unpaid interest;
(p) sixteenth, in or towards payment pari passu and rateably of any Excluded Swap Termination Amounts due and payable by the Issuer Trustee under the Interest Rate Swap Master Agreement, except to the extent such amounts have been paid out of any premiums received from any relevant replacement Interest Rate Swap Provider; and
(q) finally, the balance in payment to the Income Unitholders pari passu and rateably in whole or partial satisfaction of any entitlement to the Net Trust Income of the Trust.
The obligation of the Issuer Trustee to make any payment or allocation under each of the above paragraphs is limited in each case to the balance of the Available Income Amount after payment in accordance with the preceding paragraphs. The determination by the Manager of the payments and allocations to be made by the Issuer Trustee as described above will be based upon the Manager's reasonable expectations of amounts to be received by the Issuer Trustee after the date of determination and which will be included in the Available Income Amount on the relevant Monthly Payment Date. The Manager may revise any direction it gives to the Issuer Trustee, in relation to the above payments and allocations, at any time before a payment is made by the Issuer Trustee pursuant to that direction. If the Manager revises a direction previously given by it, then it must notify the relevant parties of that revision prior to payment by the Issuer Trustee in accordance with the revised direction.
Liquidity Reserve
A percentage of the proceeds of the issuance of Notes may be held by the Issuer Trustee as Liquidity Reserve to be applied towards Available Income Amount. The Liquidity Reserve functions:
as a liquidity reserve for the Trust which may be applied towards certain income payments of the Trust, including toward interest on the Notes (other than the Class B2 Notes), if Available Income Amount is insufficient; and
at any time, as a reserve to fund Redraws (subject to maintaining the Required Liquidity Reserve).
The Liquidity Reserve may be increased by applying Available Income Amount available for this purpose as described under the heading "— Distribution of the Available Income Amount" above. The Liquidity Reserve will be reduced to the extent that it is applied on a Monthly Payment Date towards payments and allocations for liabilities of the Trust as described under the heading "— Distribution of the Available Income Amount".
The Liquidity Reserve may only be applied on a Monthly Payment Date towards the Available Income Amount to the extent that there is a Gross Liquidity Shortfall on the Determination Date before that Monthly Payment Date. A Gross Liquidity Shortfall arises on a Determination Date if the Available Income Amount (prior to any Principal Draw or Liquidity Reserve Draw on that Determination Date) for the Collection Period just ended is insufficient to meet the Total Expenses in relation to that Collection Period.
In addition, the Liquidity Reserve may be reduced on a day which is not a Monthly Payment Date by application at any time towards the funding of Redraws. Any such application, however, must not reduce the Liquidity Reserve below the Required Liquidity Reserve. See "Description of the Assets of the Trust—
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Acquisition of Housing Loans after the Closing Date" and "—Redraws, Senior Further Advances and Subordinate Further Advances".
Extraordinary Expenses Reserve
On the Closing Date, an amount of A$150,000, which will be funded by the Manager, will be held as an Extraordinary Expenses Reserve to be applied towards certain payments of the Trust, including out-of-pocket expenses incurred by the Issuer Trustee which are not incurred in the ordinary course of the Trust.
Determination of Available Principal Amount
The Available Principal Amount in relation to a Collection Period is an amount equal to the aggregate of (without double counting) the following, as determined by the Manager:
(a) the Principal Collections in relation to that Collection Period less any Principal Collections applied during that Collection Period towards the funding of Redraws;
(b) any redraw facility advance to be drawn under the Redraw Facility Agreement on the Monthly Payment Date immediately following the end of that Collection Period; and
(c) the amount determined by the Manager to be allocated from the Available Income Amount to the Available Principal Amount on account of unreimbursed Principal Draws and the reimbursement of any Defaulted Amounts or Charge-Offs in relation to the Notes.
Distribution of the Available Principal Amount
On each Determination Date, the Manager must determine the payments and allocations to be made on the next Monthly Payment Date by the Issuer Trustee from the Available Principal Amount for the Collection Period just ended and must direct the Issuer Trustee to apply, and the Issuer Trustee must apply, the Available Principal Amount in making the following payments and allocations on that Monthly Payment Date in the following order of priority:
(a) first, to the redraw facility provider towards an amount not exceeding the Senior Redraw Facility Principal in relation to that Monthly Payment Date to be applied towards repayment of the Redraw Facility Principal outstanding on the Business Day immediately prior to that Monthly Payment Date;
(b) second, towards funding any Redraws at any time;
(c) third, pari passu and rateably:
(i) if any Class A Notes remain outstanding, to the Class A Noteholders towards repayment of principal of the Class A Notes on a pari passu and rateable basis until the Stated Amount of the Class A Notes is reduced to zero; and
(ii) if any Class A-R Notes remain outstanding, to the Class A-R Noteholders towards repayment of principal of the Class A-R Notes on a pari passu and rateable basis until the Stated Amount of the Class A-R Notes is reduced to zero;
(d) fourth, pari passu and rateably:
(i) if any Class B1 Notes remain outstanding, to the Class B1 Noteholders towards repayment of principal of the Class B1 Notes on a pari passu and rateable basis until the Stated Amount of the Class B1 Notes is reduced to zero; and
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(ii) if any Class B1-R Notes remain outstanding, to the Class B1-R Noteholders towards repayment of principal of the Class B1-R Notes on a pari passu and rateable basis until the Stated Amount of the Class B1-R Notes is reduced to zero;
(e) fifth, to the Class B2 Noteholders towards repayment of principal of the Class B2 Notes on a pari passu and rateable basis until the Stated Amount of the Class B2 Notes is reduced to zero;
(f) sixth, if the Notes have been repaid in full, to the redraw facility provider towards payment of the balance of the Redraw Facility Principal outstanding on the Business Day immediately prior to that Monthly Payment Date; and
(g) finally, the balance, if any, is to be paid to the Capital Unitholder.
Charge-Offs
Defaulted Amount Insufficiency
If the Available Income Amount for a Collection Period is less than the Defaulted Amounts (if any) for that Collection Period, then the amount of the insufficiency (the Defaulted Amount Insufficiency) will be allocated as follows:
first, the insufficiency will be charged off against the Class B2 Notes (pari passu and rateably between the Class B2 Notes based on their Stated Amounts on the relevant Determination Date) until their Stated Amount is reduced to zero;
if the insufficiency is not fully taken into account by any Charge-Offs against the Class B2 Notes (because the Stated Amount of the Class B2 Notes has been reduced to zero), the remaining insufficiency will be charged off pari passu and rateably:
against the Stated Amount for the Class B1 Notes (if any) so as to reduce the Stated Amount of the Class B1 Notes (pari passu and rateably between the Class B1 Notes based on their Stated Amounts), until the Stated Amount for the Class B1 Notes is reduced to zero; and
against the Stated Amount of the Class B1-R Notes (if any) (pari passu and rateably between the Class B1-R Notes based on their Stated Amounts) until the Stated Amount of the Class B1-R Notes is reduced to zero; and
if the insufficiency is not fully taken into account by any Charge-Offs against the Class B2 Notes, the Class B1-Notes and the Class B1-R Notes (because the Stated Amount of the Class B2 Notes, the Class B1 Notes and the Class B1-R Notes has been reduced to zero), the remaining insufficiency will be charged off pari passu and rateably:
against the Stated Amount of the Class A Notes (if any) (pari passu and rateably between the Class A Notes based on their Stated Amounts) until the Stated Amount of the Class A Notes is reduced to zero; and
against the Stated Amount of the Class A-R Notes (if any) (pari passu and rateably amongst the Class A-R Notes based on their Stated Amounts) until the Stated Amount of the Class A-R Notes is reduced to zero.
Any such reduction of the Stated Amount of a Note is called a Charge-Off.
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Reimbursements of Charge-Offs
Charge-Offs may be reimbursed from the Available Income Amount in the manner explained in "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
A reimbursement of a Charge-Off will increase the Stated Amount of the Notes by the relevant amounts allocated from the Available Income Amount, referred to in paragraphs (j), (k) and (l) under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
An amount determined by the Manager on a Determination Date to be allocated for reimbursement of a Charge-Off will be first paid on the next Monthly Payment Date, pari passu and rateably:
to the Class A Noteholders pari passu and rateably amongst the Class A Notes based on their Stated Amounts, until all Charge-Offs in respect of the Class A Notes remaining unreimbursed from all prior Monthly Payment Dates are reduced to zero; and
to the Class A-R Noteholders pari passu and rateably amongst the Class A-R Notes based on their Stated Amounts, until all Charge-Offs in respect of the Class A-R Notes remaining unreimbursed from all prior Monthly Payment Dates are reduced to zero.
After the application of the amount referred to in the paragraph above, any remaining amount allocated on a Determination Date in respect of a reimbursement of a Charge-Off will then be paid on the next Monthly Payment Date, pari passu and rateably:
to the Class B1 Noteholders pari passu and rateably amongst the Class B1 Notes based on their Stated Amounts, by the amount of the allocation remaining until all Charge-Offs in respect of the Class B1 Notes remaining unreimbursed from all prior Monthly Payment Dates are reduced to zero; and
to the Class B1-R Noteholders pari passu and rateably amongst the Class B1-R Notes based on their Stated Amounts, by the amount of the allocation remaining until all Charge-Offs in respect of the Class B1-R Notes remaining unreimbursed from all prior Monthly Payment Dates are reduced to zero.
After the application of the amount referred to in the paragraphs above, any remaining amount allocated on a Determination Date in respect of a reimbursement of a Charge-Off will then be paid on the next Monthly Payment Date to the Class B2 Noteholders pari passu and rateably amongst the Class B2 Notes based on their Stated Amounts, by the amount of the allocation remaining until all Charge-Offs in respect of the Class B2 Notes remaining unreimbursed from all prior Monthly Payment Dates are reduced to zero.
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DESCRIPTION OF THE TRANSACTION DOCUMENTS AND PARTIES
The following summary describes certain terms of the Transaction Documents including the Trust Deed, the sub-fund notice, the security trust deed, the interest rate swap agreements, the redraw facility agreement and the Management Deed except as already described above. The summary does not purport to be complete and is subject to the provisions of the Transaction Documents. The Transaction Documents are governed by the laws of New South Wales, Australia.
The Trust Deed and the Management Deed
The PUMA Program was established pursuant to the Trust Deed which provides the general terms and structure for securitisation under the PUMA Program. Under the Management Deed, the Issuer Trustee appoints the Manager to perform a wide range of duties and responsibilities relating to the management of the PUMA trusts. Below is a summary of various provisions of those documents.
General Duties of Issuer Trustee
Perpetual Limited is appointed to act as trustee of all the PUMA trusts established under the Trust Deed. The Trust Deed provides that the Issuer Trustee has only those duties expressly imposed on it. Those duties include a general obligation to exercise all due care and diligence in carrying out its roles as trustee, a duty to protect the interests of Noteholders and a duty to conduct all transactions relating to the Trust in a proper and efficient manner.
In addition, there are a number of more specific duties imposed upon the Issuer Trustee, some of which are delegated to the Manager as discussed below. These include maintaining a register of Noteholders and records of all Authorised Investments; holding Authorised Investments and all relevant title documents, either itself or by its agents, and keeping records of all such documents held by it; performing and enforcing the terms of all credit enhancements and hedge arrangements relating to the Trust; and providing notices to the rating agencies as required by the Trust Deed or by any other agreement.
The Issuer Trustee is required to act continuously as trustee until the PUMA trusts are terminated or the Issuer Trustee has retired or been removed as trustee.
The Issuer Trustee retains custody of all loan contracts and security documents in relation to the housing loans and other related securities.
Powers of the Issuer Trustee
In addition to having all of the powers conferred by statute, the Issuer Trustee is given wide ranging powers by the express terms of the Trust Deed. Among these powers, the Trust Deed confers on the Issuer Trustee all the rights over the Authorised Investments in the Trust which the Issuer Trustee would have if it was the beneficial owner of those Authorised Investments. In some circumstances, the Trust Deed restricts the Issuer Trustee's rights to only exercising its powers in accordance with the Manager's instructions.
The Trust Deed confers on the Issuer Trustee a number of specific powers. One of the most important of these is the power to make the Authorised Investments discussed under the heading "Description of the Assets of the Trust—Other Assets of the Trust". Some of the other significant powers are identified in this section.
Hedge Arrangements
The Issuer Trustee has power to enter into and perform hedge arrangements, such as interest rate swap contracts, forward rate agreements, futures contracts and options agreements, where directed to do so by the Manager in relation to an Authorised Investment. Each such hedge arrangement must be entered into with a
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counterparty that satisfies the requirements contained in the Trust Deed in relation to maintenance of the ratings of the Notes.
It is this power that the Issuer Trustee exercises, based on a direction by the Manager, on behalf of the Trust in entering into the interest rate swap contracts referred to under the heading "Description of the Transaction Documents and Parties—Interest Rate Swaps".
Standby Arrangements
Subject to some restrictions, the Issuer Trustee has power to enter into and perform certain standby arrangements whereby a third party lends money to the Issuer Trustee on behalf of the Trust to meet shortfalls of funds. Again, the provider of such arrangements must satisfy the requirements contained in the Trust Deed in relation to maintenance of the ratings of the Notes. It is this power that the Issuer Trustee exercises, based on a direction by the Manager, on behalf of the Trust in entering into the redraw facility agreement referred to in "Description of the Transaction Documents and Parties—The Redraw Facility".
Additional Power to Borrow
The Issuer Trustee has the power, at the written direction of the Manager, to borrow on behalf of the Trust other than by issuing Notes or entering into standby arrangements, provided this does not adversely affect the rating of Notes. Any such borrowings, not obtained by issuing notes or entering into standby arrangements, must be fully subordinated to the rights of all Noteholders to be paid interest and principal.
Delegation by Issuer Trustee
While the Issuer Trustee is expressly prohibited from delegating certain duties under the Trust Deed, it is generally free to delegate the balance of its powers and duties. Notably, there are some powers and duties which the Issuer Trustee must delegate. The Trust Deed provides that once these particular powers and duties have been delegated the Issuer Trustee has no further duty and obligation, other than as provided by the Trust Deed, for their due performance. The extent to which delegation of these and other powers and duties has been made to the Manager is described below.
Issuer Trustee Fees and Expenses
The Issuer Trustee's fees, or the method of calculation of those fees, are agreed between the Issuer Trustee and the Manager from time to time. The amount of these fees will be determined prior to the issue of any Notes by the Issuer Trustee and will be notified by the Manager to each rating agency.
The Trust Deed entitles the Issuer Trustee to meet certain Fees and Expenses incurred in relation to the Trust by payment from the assets of the Trust. These include the following expenses:
the Issuer Trustee's fee as referred to above;
bank charges in respect of cashflows occurring in respect of the Trust;
audit fees applicable to the Trust;
any stamp duty payable in respect of the Transaction Documents;
fees payable to the Manager or any Originator in respect of the Trust;
amounts payable or costs incurred under or arising in relation to any Transaction Document;
any costs incurred by the Issuer Trustee in relation to any clearing system;
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any costs incurred by the Issuer Trustee in complying with its obligations under any Transaction Document and the establishment or maintenance of any such Transaction Document;
any costs incurred by the Issuer Trustee in exercising its powers under the Trust Deed;
liabilities arising under the Consumer Credit Code, National Credit Code and National Consumer Credit Legislation; and
all other liabilities, taxes and costs properly incurred or which in the reasonable opinion of the Issuer Trustee may be incurred by the Issuer Trustee, the Manager, any Originator or any delegate of the Issuer Trustee or the Manager in respect of the Trust.
The above amounts, excluding any amounts payable in respect of the Notes and amounts referred to in paragraphs (a) and (c) to (q) under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" and liabilities of the Issuer Trustee in respect of Prepayment Amounts, are referred to as the Fees and Expenses.
Retirement and Removal of the Issuer Trustee
The Issuer Trustee may retire on not less than 90 days written notice to the Manager, or such shorter period as is agreed by the Manager, provided that the retirement of the Issuer Trustee will not become effective until a new trustee has been appointed. Upon receipt of such notice from the Issuer Trustee, the Manager may appoint a new trustee or, if the Manager fails to appoint a new trustee within 60 days of receiving the Issuer Trustee's notice of retirement, the retiring Issuer Trustee may appoint a new trustee. If no new trustee is appointed within 120 days of the Issuer Trustee giving such notice, the Issuer Trustee will not be entitled to retire and will, subject to the following, continue as trustee of the Trust until termination of all PUMA trusts. During this period, the Issuer Trustee will not accept further subscriptions from investors or allow further investments to be vested with it and may appoint a suitably qualified entity as a new trustee in its place. The Issuer Trustee is obliged to retire (and if it does not comply with that obligation, it can be removed by the Manager) in some circumstances, including following the commencement of winding up proceedings or the appointment of a receiver to Perpetual Limited.
Limitation of the Issuer Trustee's Liability
The Issuer Trustee is relieved from any personal liability in relation to its performance except to the extent that such liability results from its own fraud, negligence or wilful default or that of its officers or employees or agents or delegates that are related bodies corporate of the Issuer Trustee. For this purpose, an agent or delegate of the Issuer Trustee does not include the Manager, an Originator or a clearing house.
Apart from that general exclusion of liability, the Issuer Trustee is entitled to rely, in good faith, on the genuineness and correctness of documents and certificates furnished to it by the Manager, any Originator or any other person provided it has no reason to believe that such document or certificate is not genuine or correct. The Issuer Trustee is also entitled to rely and act upon advice or opinions provided by the Manager, any Originator, barrister, lawyer, banker or other person believed by it in good faith to be expert in relation to the relevant matter.
Subject to the terms of the Trust Deed, the Issuer Trustee is not responsible for any act, omission, misconduct, mistake, oversight, error of judgment, forgetfulness or want of prudence on the part of the Manager, any Originator, any other delegate, agent or adviser or any other person appointed by the Issuer Trustee or the Manager or upon whom the Issuer Trustee or the Manager is entitled to rely (other than a related body corporate of the Issuer Trustee).
A number of limitations on the Issuer Trustee's liability are set out in full in the Trust Deed and the other Transaction Documents. These include the limitation that the Issuer Trustee will not be liable for any loss, costs, liabilities or expenses:
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arising out of the exercise or non-exercise of its discretions or for any other act or omission on its part under any Transaction Document or otherwise in relation to the Trust;
arising out of the exercise or non-exercise of a discretion on the part of the Manager or any act or omission of the Manager; or
caused by it acting on any instruction or direction given to it by the Manager,
except to the extent that they are caused by the Issuer Trustee's or any of its officer's, employee's, agent's or delegate's own fraud, negligence or wilful default.
Rights of Indemnity of Issuer Trustee
The Issuer Trustee is indemnified out of the assets of the Trust for any liability, cost or expense properly incurred by the Issuer Trustee in performing or exercising any of its powers or duties. This indemnity is in addition to any indemnity allowed to the Issuer Trustee by law, but does not extend to any liabilities arising from the Issuer Trustee's fraud, negligence or wilful default.
The Issuer Trustee is indemnified out of the assets of the Trust against certain payments it may be liable to make under the Consumer Credit Code, National Credit Code and National Consumer Credit Legislation. The Manager also indemnifies the Issuer Trustee in relation to such payments to a certain extent and the Issuer Trustee is required to first call on the indemnity from the Manager before calling on the indemnity from the assets of the Trust. See "Description of the Assets of the Trust – Consumer Credit Code and National Credit Code" above.
Powers of Manager
Under the Management Deed, the Issuer Trustee has appointed the Manager to perform a wide range of duties and responsibilities relating to the management of the PUMA trusts. The scope of those management functions includes:
the appointment of Originators and thereafter management of the origination of housing loans in accordance with the provisions of the mortgage origination agreement, the PUMA Parameters, the Management Deed and the Trust Deed and all other relevant Transaction Documents;
co-ordinating the raising of funds by the issue of instruments such as the Notes;
the selection and management of Authorised Investments; and
the establishment and monitoring of mortgage insurance policies, standby arrangements and other Security Enhancements and hedge arrangements in respect of the Trust.
In addition to the above, the Issuer Trustee has delegated to the Manager both the general administration and management of the PUMA trusts and the conduct of the day to day operation of the PUMA trusts.
Under the Trust Deed, the Manager must not knowingly direct the Issuer Trustee to make any investment or enter into any contractual commitment to make an investment, or knowingly do any other thing in relation to the Trust, that would result in a reduction, qualification or withdrawal of the ratings given to the Notes by the rating agencies.
Covenants of Manager
The Manager covenants to calculate the Threshold Rate on each Determination Date and notify the Issuer Trustee of that Threshold Rate on or prior to the next Monthly Payment Date.
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Delegation by Manager
The Manager may, in carrying out and performing its duties and obligations in relation to the Trust, appoint in writing any person as agent, delegate or nominee of the Manager with such powers as the Manager thinks fit but not exceeding those vested in the Manager. However, the Manager is not able to delegate particular functions which are specified in the Management Deed. These functions which cannot be delegated include certifying that the housing loan secured by a mortgage meets the required criteria, managing the relevant Security Enhancements, complying with mortgage insurer requirements, including the preparation of reports to the mortgage insurer, and managing the origination process.
Manager's Fees, Expenses and Indemnification
The Manager's fee is payable on each Monthly Payment Date, or such other dates that may be agreed between the Issuer Trustee and the Manager, throughout the duration of the Trust. The Manager's fee for a Monthly Payment Date will be as agreed between the Manager and the Issuer Trustee from time to time. The Manager's fee will be determined on the basis of a certified fee statement issued by the Manager to the Issuer Trustee, which sets out the calculation of the Manager's fee. The Issuer Trustee may either pay the amount of the Manager's fee specified in the fee statement or refer the fee statement to the auditor of the Trust for determination. The determination of the auditor of the Trust will be conclusive and binding.
It is expected that all of the Manager's fee on each Monthly Payment Date will be paid in priority to interest on the Notes on that Monthly Payment Date.
The Manager is indemnified out of the assets of the Trust for any liability properly incurred by the Manager in performing or exercising any of its powers or duties. This indemnity does not extend to any liabilities arising from the Manager's fraud, negligence or wilful default.
Removal or Retirement of the Manager
As with the Issuer Trustee, the Manager may retire on not less than 90 days' written notice to the Issuer Trustee, or such shorter period as the Issuer Trustee agrees. Upon provision of such notice, the Manager may nominate a new manager for appointment by the Issuer Trustee or, if the Manager fails to nominate a new manager within 60 days of providing such a notice, the Issuer Trustee may appoint a new manager. Where the Manager has given notice of its retirement and no new manager is appointed within 90 days (or such shorter period as agreed with the Issuer Trustee) from the date of such notice, the Issuer Trustee must act as manager and will be entitled to the Manager's fee accruing after such date.
The Issuer Trustee may require the Manager to retire in some circumstances. Those circumstances include the commencement of the winding up of the Manager, the appointment of a receiver in respect of the Manager and the failure by the Manager to remedy any material breach of its obligations within 14 days of written notice.
Limitation of Manager's Liability
Subject to the terms of the Trust Deed, the Manager is relieved from any personal liability in relation to its performance except to the extent that such liability results from its own fraud, negligence or wilful default or that of its officers, employees, agents or delegates.
Apart from that general exclusion of liability, the Manager is entitled to rely, in good faith, on the genuineness and correctness of documents and certificates furnished to it by the Issuer Trustee, any Originator or any other person provided it has no reason to believe that such document or certificate is not genuine or correct. The Manager is also entitled to rely and act upon advice or opinions provided by the Issuer Trustee, any Originator, barrister, lawyer, banker or other person believed by it in good faith to be expert in relation to the relevant matter.
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Subject to the terms of the Trust Deed, the Manager is not responsible for any act, omission, misconduct, mistake, oversight, error of judgment, forgetfulness or want of prudence on the part of the Issuer Trustee, any Originator, any other delegate, agent or adviser or any other person appointed by the Issuer Trustee or the Manager or upon whom the Issuer Trustee or the Manager is entitled to rely (other than a related body corporate of the Manager).
Subject only to the Manager's obligation to indemnify the Issuer Trustee against any civil and criminal penalties under the Consumer Credit Code, the National Credit Code or the National Consumer Credit Legislation in relation to the Trust (except to the extent such penalties arise as a result of the fraud, negligence or wilful default of the Issuer Trustee) the Manager is not personally liable to indemnify the Issuer Trustee or to make any payments to any other person in relation to the Trust except where arising from any fraud, negligence, wilful default or breach of duty by it in its capacity as Manager of the Trust. A number of limitation’ on the Manager's liability are set out in full in the Trust Deed and the other Transaction Documents. These include the limitation that the Manager will not be liable for any loss, costs, liabilities or expenses:
arising out of the exercise or non-exercise of its discretions or for any other act or omission on its part under any Transaction Document or otherwise in relation to the Trust;
arising out of the exercise or non-exercise of a discretion on the part of the Issuer Trustee or any act or omission of the Issuer Trustee; or
caused by it acting on any instruction or direction given to it by the Issuer Trustee,
except to the extent that they are caused by the Manager's or any of its officer's, employee's, agent's or delegate's own fraud, negligence or wilful default.
Auditing of Accounts and Net Income
The treatment of any amount received or disbursed by the Issuer Trustee, the determination of the net income of a Trust (the Net Income) and whether any item is of a capital or income nature shall be determined, and the Issuer Trustee must keep or cause to be kept proper and timely records of the accounts of the Trust in accordance with generally accepted Australian accounting principles and practices provided that for the purpose of determining the Net Income of the Trust the Manager need not comply with such principles and practices including, without limitation, AASB 139 "Financial Instruments: Recognition and Measurement" to the extent that this would require it to include in the calculation of net income notional gains or losses on hedge arrangements prior to the termination of such hedge arrangements. The Manager must prepare annual accounts for the Trust and the Issuer Trustee must arrange for these to be audited.
Limits on Rights of Noteholders
Apart from their beneficial interest in the Security granted under the security trust deed, the Noteholders do not own and have no interest in the Trust or any of its assets. In particular, no Noteholder is entitled to:
an interest in any particular part of the Trust or any asset of the Trust;
require the transfer to it of, or dealing by the Issuer Trustee with, any asset of the Trust;
interfere with or question the exercise or non-exercise of the duties, powers, authorities and discretions of the Manager or the Issuer Trustee or any of their delegates or agents in their dealings with the Trust or any assets of the Trust;
exercise any rights, powers or privileges in respect of any asset of the Trust;
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lodge a caveat or other notice forbidding the registration of any person as transferee or proprietor of or any instrument affecting any asset of the Trust or claiming any estate or interest in any asset of the Trust;
negotiate or communicate in any way with any borrower or security provider under any housing loan assigned to the Issuer Trustee;
seek to wind up or terminate the Trust;
take proceedings against the Issuer Trustee, the Manager, or in respect of the Trust or the assets of the Trust. This will not limit the right of Noteholders to compel the Issuer Trustee, the Manager and the Security Trustee to comply with their respective obligations under the Trust Deed, the sub-fund notice and the security trust deed, in the case of the Issuer Trustee and the Manager, and the security trust deed, in the case of the Security Trustee; or
have any recourse to Perpetual Limited or the Manager in their personal capacity, except to the extent of fraud, negligence or wilful default on the part of the Issuer Trustee or the Manager respectively.
Termination of the Trust
The Trust will continue until the earliest to occur of:
the day notified by the Manager to the Issuer Trustee in writing following the date of the payment of all moneys due to any person under or pursuant to the provisions of the Trust Deed, as it relates to the Trust, or in the event of a deficiency such lesser amounts as are finally available for payment and distribution upon full and final liquidation and realisation of the Authorised Investments comprised in the Trust and the exercise by the Issuer Trustee of all rights which the Issuer Trustee thinks appropriate (including in relation to any Security Enhancement) in relation to the Trust;
the earlier of 31 December 2069 and twenty years from the date of death of the last survivor of the descendants of His Late Majesty King George V of the United Kingdom of Great Britain and Northern Ireland, living on 8 June 1993; and
the date that the Security granted under the security trust deed is released.
Sub-Fund Notice
Macquarie Securitisation Limited, as the Manager of the PUMA Program, will issue to the Issuer Trustee a sub-fund notice in respect of the Trust. The sub-fund notice will establish the Trust and set out the specific details of the Trust including, amongst other things, the notes which will be issued in respect of the Trust by the Issuer Trustee and the distributions of interest and principal payments under the Trust. Those details may vary from the terms set forth in the Trust Deed.
Amendments to the Trust Deed and Sub-Fund Notice
In addition to the powers, duties and other rights relating to the Trust Deed and the sub-fund notice, the Issuer Trustee and the Manager are empowered to vary the Trust Deed, to the extent that it applies to the Trust, and the sub-fund notice, to make amendments which are:
(a) to correct a manifest error or ambiguity or are of a formal, technical or administrative nature only;
(b) in the opinion of the Issuer Trustee necessary to comply with the provisions of any statute or regulation or with the requirements of any governmental authority;
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(c) in the opinion of the Issuer Trustee appropriate or expedient as a consequence of the enactment of, or an amendment to any statute or regulation or altered requirements of any governmental authority or the decision of any court, including, without limitation, an alteration, addition or modification which is in the opinion of the Issuer Trustee appropriate or expedient as a consequence of the enactment of a statute or regulation or an amendment to any statute or regulation or ruling by the Commissioner or Deputy Commissioner of Taxation or any governmental announcement or statement, in any case which has or may have the effect of altering the manner or basis of taxation of trusts generally or of trusts similar to any of the PUMA trusts;
(d) in the opinion of the Issuer Trustee neither prejudicial nor likely to be prejudicial to the interests of Noteholders or the Unitholders of the Trust;
(e) an alteration, addition or modification to the Authorised Investments where without such alteration, addition or modification, any stamp duty concession in respect of the issue or transfer of Notes would be prejudiced;
(f) necessary to ensure that neither the Trust Deed nor any offer or transfer in respect of Notes is required to be registered with or approved by any regulatory authority in any State or Territory of the Commonwealth of Australia; or
(g) in the opinion of the Issuer Trustee will enable the provisions of the Trust Deed or any Transaction Document to be more conveniently, advantageously, profitably or economically administered or is otherwise desirable for any reason.
Where, in the opinion of the Issuer Trustee, a proposed variation as described in paragraph (g) above, is prejudicial or likely to be prejudicial to the interests of Noteholders, a class of Noteholders or any Unitholder, such variation may be effected by the Issuer Trustee if approved by a resolution of 75% of the votes that may be cast at a meeting of Noteholders, or that class of Noteholders, or with the prior written consent of such Unitholder. The Issuer Trustee may assume that any amendment to the Trust Deed or the sub-fund notice is not prejudicial, or likely to be prejudicial, to the interests of Noteholders or a class of Noteholders if the Issuer Trustee receives written confirmation from the Manager that it is satisfied, following providing notice to the rating agencies, that the proposed amendment will not result in a reduction, qualification or withdrawal of a credit rating then assigned by the rating agencies to the relevant Notes.
The Trust Deed may be amended with respect to other existing PUMA trusts, or future PUMA trusts, without reference to the Noteholders of the Trust.
The Security Trust Deed
General
Perpetual Trustee Company Limited of Level 12, Angel Place, 123 Pitt Street, Sydney, Australia is the Security Trustee. Perpetual Trustee Company Limited has obtained an Australian Financial Services Licence under Part 7.6 of the Corporations Act (Australian Financial Services Licence No. 236643). Pursuant to the security trust deed, the Issuer Trustee will grant a combination of:
a security interest over all of the Trust assets which are subject to the PPS Act (the Granted PPS Security Interest); and
a floating charge over all of the Trust assets which are not subject to the PPS Act (the Charge and, together with the Granted PPS Security Interest, the Security),
in favour of the Security Trustee. The Security will secure the Secured Moneys owing to the Noteholders, the redraw facility provider, any other standby arrangement provider and each Interest Rate Swap Provider.
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These secured parties are collectively known as the Secured Creditors. There is no other security or guarantee of the Issuer Trustee's obligations under the Notes.
Most of the Secured Property will be subject to the PPS Act and accordingly secured by the Granted PPS Security Interest rather than by the Charge. The main relevant exceptions to the foregoing statement are mortgages over land located in Australia – such mortgages, to the extent that they constitute interests in land, are not subject to the PPS Act and accordingly are secured by the Charge rather than by the Granted PPS Security Interest.
Nature of the Granted PPS Security Interest
The Granted PPS Security Interest is subject to the PPS Act, which sets out specific provisions governing its attachment, enforceability as against third parties and perfection. The Granted PPS Security Interest has been, or will before the Closing Date be, perfected in accordance with the PPS Act by registration on the register maintained under the PPS Act.
Additionally, the PPS Act sets out specific provisions governing the enforcement and priority of security interests subject to that Act. Certain of the PPS Act enforcement provisions have been supplemented or contracted out of under the security trust deed.
The Issuer Trustee has agreed not to dispose of or create interests in the assets of the Trust subject to the PPS Security Interest except in accordance with the Trust Deed, the sub-fund notice or any other Transaction Document and the Manager has agreed not to direct the Issuer Trustee to take any such actions. Such a contractual restriction will not, however, result in a third party interest in the assets of the Trust created in breach of the foregoing being void or voidable.
Nature of the Charge
A floating charge, like that created by the security trust deed, does not attach to specific assets but instead "floats" over a class of assets which may change from time to time. The company granting the floating charge may deal with those assets and give third parties title to those assets free from any encumbrance, provided such dealings and transfers of title are in the ordinary course of the company's business. The Issuer Trustee has agreed not to dispose of or create interests in the assets of the Trust subject to the floating charge except in accordance with the Trust Deed, the sub-fund notice or any other Transaction Document and the Manager has agreed not to direct the Issuer Trustee to take any such actions. If, however, the Issuer Trustee disposes of any of the trust assets, including any housing loan, other than in accordance with the Trust Deed, the sub-fund notice or any other Transaction Document, the person acquiring the property may nevertheless take it free of the floating charge. The floating charge granted over the trust assets will crystallize, which means it becomes a fixed charge, upon the occurrence of an event of default or will become fixed over the affected assets in the case of certain events of default including any dealing with an asset of the Trust by the Issuer Trustee in contravention of the Transaction Documents. Once the floating charge crystallizes, the Issuer Trustee will still be obliged not to dispose of or create interests in the assets of the Trust except in accordance with the Transaction Documents and, as a result of the crystallization of the Charge, any attempt to do so in violation of the Transaction Documents will not generally be effective to create interests in the assets of the Trust ranking in priority to the Charge.
The Security Trustee
The Security Trustee is appointed to act as trustee of the security trust on behalf of the Secured Creditors and holds the benefit of the Security over the trust assets in Trust for each Secured Creditor on the terms and conditions of the security trust deed. If, in the Security Trustee's opinion, there is a conflict between the duties owed by the Security Trustee to any Secured Creditor or class of Secured Creditors and the interests of Noteholders as a whole, the Security Trustee must give priority to the interests of the Noteholders as a whole. In addition, the Security Trustee must give priority to the interests of the Class A Noteholders or the Class A-R Noteholder (as applicable) if, in the Security Trustee's opinion, there is a conflict between the
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interests of Class A Noteholders or, if any, the Class A-R Noteholders, on the one hand, and the interests of the Class B1 Noteholders, the Class B1-R Noteholders or the Class B2 Noteholders and the other Secured Creditors, on the other hand. Similarly, the Security Trustee must give priority to the interests of the Class B1 Noteholders or the Class B1-R Noteholders (as applicable) if, in the Security Trustee’s opinion, there is a conflict between the interests of the Class B1 Noteholders or the Class B1-R Noteholders, on one hand, and the interests of the Class B2 Noteholders, on the other hand.
Duties and Liabilities of the Security Trustee
The Security Trustee's liability to the Secured Creditors is limited to the amount the Security Trustee recovers through its right of indemnity from the assets held on Trust by it under the security trust deed. However, this limitation will not apply to the extent that the Security Trustee limits its right of indemnity as a result of its own fraud, negligence or wilful default.
The security trust deed contains a range of other provisions regulating the scope of the Security Trustee's duties and liabilities. These include the following:
the Security Trustee is not required to monitor whether an event of default has occurred or compliance by the Issuer Trustee or Manager with the Transaction Documents or their other activities;
the Security Trustee is not required to do anything unless its liability is limited in a manner satisfactory to it;
the Security Trustee is not responsible for the adequacy or enforceability of any Transaction Documents;
except as expressly stated in the security trust deed, the Security Trustee need not give to the Secured Creditors information concerning the Issuer Trustee or the Trust which comes into the possession of the Security Trustee;
the Issuer Trustee gives wide ranging indemnities to the Security Trustee in relation to its role as Security Trustee; and
the Security Trustee may rely on documents and information provided by the Issuer Trustee or Manager.
Events of Default
Each of the following is an event of default under the security trust deed:
the Issuer Trustee is obliged to retire or is removed, as trustee of the Trust and is not replaced within 60 days in accordance with the Trust Deed;
the Security Trustee has actual notice or is notified by the Manager or the Issuer Trustee that the Issuer Trustee is not entitled for any reason to fully exercise its right of indemnity against the assets of the Trust to satisfy any liability to a Secured Creditor and the circumstances are not rectified to the reasonable satisfaction of the Security Trustee within 14 days of the Security Trustee requiring this;
the Trust is not properly constituted or is imperfectly constituted in a manner or to an extent that is regarded by the Security Trustee acting reasonably to be materially prejudicial to the interests of any class of Secured Creditor and is incapable of being, or is not within 30 days of the discovery thereof, remedied;
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an Insolvency Event occurs in relation to the Issuer Trustee in its capacity as trustee of the Trust;
distress or execution is levied or a judgment, order or encumbrance is enforced, or becomes enforceable, over any of the assets of the Trust for an amount exceeding A$1,000,000, either individually or in aggregate, or can be rendered enforceable by the giving of notice, lapse of time or fulfilment of any condition;
the Security granted under the security trust deed is or becomes wholly or partly void, voidable or unenforceable;
subject only to the Prior Interest, the Issuer Trustee attempts to create or allows to exist a security interest over the assets of the trust or transfers, assigns or otherwise disposes of, or creates or allows to exist, any other interest over the assets of the Trust, otherwise than in accordance with the Trust Deed, the sub-fund notice or the security trust deed; and
any Secured Moneys (other than any amounts payable to the redraw facility provider for increased costs as described under the heading "—The Redraw Facility—Increased Costs") in relation to, or which rank senior to or pari passu with, the then Highest Class of Note Outstanding are not paid within ten days of when due.
The Security Trustee may determine that any event that would otherwise be an event of default under the security trust deed will not be treated as an event of default, where this will not in the opinion of the Security Trustee be materially prejudicial to the interests of the Secured Creditors. However, it must not do so in contravention of any prior directions in an Extraordinary Resolution of Secured Creditors. Unless the Security Trustee has made such an election, and providing that the Security Trustee is actually aware of the occurrence of an event of default, the Security Trustee must promptly and, in any event, within 2 Business Days, convene a meeting of the Secured Creditors at which it shall seek directions from the Secured Creditors by way of Extraordinary Resolution regarding the action it should take as a result of that event of default.
Meetings of Voting Secured Creditors
The security trust deed contains provisions for convening meetings of the Voting Secured Creditors to enable the Voting Secured Creditors to direct or consent to the Security Trustee taking or not taking certain actions under the security trust deed, including directing the Security Trustee to enforce the Security granted under the security trust deed. Meetings may also be held of a class or classes of Voting Secured Creditors under the security trust deed.
Voting Procedures
Every question submitted to a meeting of the Voting Secured Creditors shall be decided in the first instance by a show of hands. If a vote results in a tie, the chairman shall, both on a show of hands and on a poll, have a casting vote. A representative is a person or body corporate appointed as a proxy for a Secured Creditor or a representative of a corporate Secured Creditor under the Corporations Act. On a show of hands, every person holding, or being a representative holding or representing other persons who hold, Secured Moneys shall have one vote. If at any meeting a poll is demanded, every person who is present shall have one vote, rounded down, for every A$10 of Secured Moneys owing to it.
A resolution of all of the Voting Secured Creditors, including an Extraordinary Resolution, may be passed, without any meeting or previous notice being required, by an instrument or notice in writing which has been signed by all of the Voting Secured Creditors.
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Enforcement of the Security
Upon a vote at a meeting of Voting Secured Creditors called following an event of default under the security trust deed, or by a resolution in writing signed by all of the Voting Secured Creditors, the Voting Secured Creditors may direct the Security Trustee by Extraordinary Resolution to do any or all of the following:
declare all Secured Moneys immediately due and payable;
appoint a receiver over the Trust assets and determine the remuneration to be paid to that receiver;
sell and realise the assets of the Trust and otherwise enforce the Security; or
take any other action as the Voting Secured Creditors may specify in the terms of such Extraordinary Resolution.
Any enforcement action taken by the Security Trustee will only relate to the same rights in relation to the assets of the Trust as are held by the Issuer Trustee and subject to rights granted over those assets to others (including the PUMA trustee in other capacities). In particular, Perpetual Limited, in its capacity as trustee of all the other PUMA trusts, has the right to acquire all the housing loans upon enforcement of the Security granted under the security trust deed for an amount equal to their then outstanding principal plus or minus an adjustment for any fixed rate housing loans not transferred with the benefit of an interest rate swap. If Perpetual Limited, as trustee of the other PUMA trusts, at the direction of the Manager, exercises this right, the Security Trustee will not be able to realise any value in the housing loans in excess of their outstanding principal balances other than any adjustment in its favour in respect of fixed rate housing loans. In addition, the aggregate amount recoverable under the security trust deed at any time may not exceed the value of the assets then secured under the security trust deed.
No Secured Creditor is entitled to enforce the Security under the security trust deed, or appoint a receiver or otherwise exercise any power conferred by any applicable law on security interests, otherwise than in accordance with the security trust deed.
Limitations of Actions by the Security Trustee
The Security Trustee is not obligated to take any action, give any consent or waiver or make any determination under the security trust deed without being directed to do so by an Extraordinary Resolution of the Voting Secured Creditors in accordance with the security trust deed, unless, in the opinion of the Security Trustee, the delay required to obtain such directions would be prejudicial to Voting Secured Creditors as a class. The Security Trustee is not obligated to act unless it obtains an indemnity from the Voting Secured Creditors and funds have been deposited on behalf of the Security Trustee to the extent to which it may become liable for the relevant enforcement actions.
If the Security Trustee convenes a meeting of the Voting Secured Creditors, or is required by an Extraordinary Resolution to take any action under the security trust deed and advises the Voting Secured Creditors before or during the meeting that it will not act in relation to the enforcement of the security trust deed, unless it is personally indemnified by the Voting Secured Creditors to its reasonable satisfaction against all actions, proceedings, claims and demands to which it may render itself liable, and all costs, charges, damages and expenses which it may incur in relation to the enforcement of the security trust deed and is given funds to the extent to which it may become liable, including costs and expenses, and the Voting Secured Creditors refuse to grant the requested indemnity, and give the Security Trustee funds, the Security Trustee will not be obliged to act in relation to such enforcement under the security trust deed. In those circumstances, the Voting Secured Creditors may exercise such powers of the Security Trustee under the security trust deed as they determine by Extraordinary Resolution.
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Priorities under the Security Trust Deed
The proceeds from the enforcement of the Security are to be applied in the following order of priority, subject to any statutory or other priority which may be given priority by law:
first, to pay pari passu and rateably amounts owing or payable under the security trust deed to indemnify the Security Trustee, the Manager or any receiver against all loss and liability incurred in acting under the security trust deed, except the receiver's remuneration and in payment of the Prior Interest;
second, to pay pari passu and rateably any fees and any liabilities, losses, costs, claims, expenses, actions, damages, demands, charges, stamp duties and other taxes due to the Security Trustee and the receiver's remuneration;
third, to pay pari passu and rateably other outgoings and liabilities that the receiver or the Security Trustee have incurred in acting under the security trust deed;
fourth, to pay pari passu and rateably any security interests over the assets of the Trust of which the Security Trustee is aware having priority to the Security under the security trust deed, other than the Prior Interest, in the order of their priority;
fifth, to pay pari passu and rateably any Secured Creditor any Prepayment Amount (other than any collateral returned, or required to be returned, to the provider of that collateral) lodged with the Issuer Trustee by that Secured Creditor;
sixth, to pay pari passu and rateably:
the Class A Noteholders any Secured Moneys owing in relation to the Class A Notes. This will be applied:
first, rateably towards all interest accrued but unpaid on the Class A Notes; and
second, rateably to reduce the Invested Amount of the Class A Notes; and
the Class A-R Noteholders any Secured Moneys owing in relation to the Class A-R Notes. This will be applied:
first, rateably towards all interest accrued but unpaid on the Class A-R Notes; and
second, rateably to reduce the Invested Amount of the Class A-R Notes;
any Secured Moneys owing to the redraw facility provider to the extent of the then Senior Redraw Facility Principal and the Senior Redraw Facility Interest Amount;
any Secured Moneys owing to each Interest Rate Swap Provider other than any Excluded Swap Termination Amount;
any Secured Moneys owing to any other standby arrangement provider;
seventh, to pay pari passu and rateably:
the Class B1 Noteholders any Secured Moneys owing in relation to the Class B1 Notes. This will be applied:
first, rateably towards all interest accrued but unpaid on the Class B1 Notes; and
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second, rateably to reduce the Invested Amount of the Class B1 Notes; and
the Class B1-R Noteholders any Secured Moneys owing in relation to the Class B1-R Notes. This will be applied:
first, rateably towards all interest accrued but unpaid on the ClassB1-R Notes; and
second, rateably to reduce the Invested Amount of the Class B1-R Notes;
eighth, to pay any Secured Moneys owing to the Class B2 Noteholders:
first, rateably towards all interest accrued but unpaid on the Class B2 Notes; and
second, rateably to reduce the Invested Amount of the Class B2 Notes;
ninth, to the redraw facility provider of any remaining Secured Moneys owing to the redraw facility provider;
tenth, in or towards payment, pari passu and rateably, of any Excluded Swap Termination Amounts due and payable by the Issuer Trustee under the Interest Rate Swap Master Agreement, except to the extent such amounts have been paid out of any premiums received from any relevant replacement Interest Rate Swap Provider or any break costs payable by the Issuer Trustee to the Interest Rate Swap Provider on early termination of any Interest Rate Swap to the extent that those break costs are not recovered under the housing loan from the mortgagor as Mortgagor Break Costs;
eleventh, to pay pari passu and rateably to each Secured Creditor any monetary liabilities owing to that Secured Creditor under any Transaction Document and not satisfied under the preceding paragraphs;
twelfth, to pay subsequent security interests over the assets of the Trust of which the Security Trustee is aware, in the order of their priority; and
thirteenth, to pay any surplus to the Issuer Trustee to be distributed in accordance with the terms of the Trust Deed and the sub-fund notice. The surplus will not carry interest as against the Security Trustee.
Any collateral provided under a hedge arrangement will not be available for distribution in accordance with the bullet points above. Any such collateral will (subject to the operation of any netting provisions in the relevant hedge arrangement) be returned to the provider of that collateral except to the extent that the relevant hedge arrangement requires it to be applied to satisfy any obligation owed to the Issuer Trustee by the provider of that collateral or amount.
Upon enforcement of the Security created by the security trust deed, the net proceeds may be insufficient to pay all amounts due on redemption to the Noteholders. Any claims of the Noteholders remaining after realisation of the Security and application of the proceeds shall be extinguished.
Security Trustee's Fees and Expenses
The Issuer Trustee shall reimburse the Security Trustee for all costs and expenses of the Security Trustee incurred in performing its duties under the security trust deed. The Security Trustee shall receive a fee in the amount agreed from time to time by the Issuer Trustee, the Security Trustee and the Manager provided that the rating agencies must be given prior notice of any variation of the fee and the fee may not be varied unless the Manager is satisfied that this would not result in a downgrade, qualification or withdrawal of the credit rating of any Note.
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Mandatory Retirement and Removal of the Security Trustee
The Security Trustee must retire if:
an Insolvency Event occurs with respect to it in its personal capacity;
it ceases to carry on business;
the Issuer Trustee, where the Security Trustee is a related body corporate of the Issuer Trustee, retires or is removed from office and the Manager requires the Security Trustee by notice in writing to retire;
the Voting Secured Creditors require it to retire by an Extraordinary Resolution;
it breaches a material duty and does not remedy the breach with 14 days' notice from the Manager or the Issuer Trustee; or
there is a change in ownership of 50% or more of the issued equity share capital of the Security Trustee from the position as at the date of the security trust deed or effective control of the Security Trustee alters from the position as at the date of the security trust deed unless in either case approved by the Manager, whose approval must not be unreasonably withheld.
If the Security Trustee is removed, the Issuer Trustee, or failing it the Manager, may appoint a suitably qualified person as a replacement Security Trustee provided that the rating agencies are notified of that appointment and each rating agency has confirmed that the appointment will not result in a downgrade, qualification or withdrawal of the credit ratings assigned to the Notes.
Voluntary Retirement of the Security Trustee
The Security Trustee may retire on giving 3 months' written notice (or such shorter period as may be agreed). If the Security Trustee retires, it may appoint a suitably qualified person to act in its place with the approval of the Manager, which approval must not be unreasonably withheld, and of which the Manager is satisfied that the appointment will not result in a downgrade, qualification or withdrawal of the credit ratings then assigned to the Notes. If the Security Trustee does not propose a replacement by one month prior to the date of its retirement, the Manager is entitled to appoint a substitute Security Trustee (which must be a suitably qualified person) if the Manager is satisfied that such appointment will not result in a downgrade, qualification or withdrawal of the credit ratings then assigned to the Notes.
The Security Trustee's retirement is effective upon the earlier to occur of the expiry of a 3 month period commencing on the date of notification of the retirement of the Issuer Trustee from its role as trustee of all trusts established under the PUMA Programme and the appointment of a substitute Security Trustee. If a substitute Security Trustee has not been appointed as described above, the Manager must promptly convene a meeting of all Voting Secured Creditors who may by Extraordinary Resolution appoint a replacement Security Trustee.
Amendment
The Issuer Trustee, the Manager and the Security Trustee may together agree to alter, add to or revoke any provision of the security trust deed by way of a supplemental deed, subject to the limitations described below, if the alteration, addition or revocation:
in the opinion of the Security Trustee, is made to correct a manifest error or ambiguity or is of a formal, technical or administrative nature only;
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in the opinion of the Security Trustee, or of a lawyer instructed by the Security Trustee, is necessary or expedient to comply with the provisions of any law or regulation or with the requirements of any governmental agency;
in the opinion of the Security Trustee, is appropriate or expedient as a consequence of an amendment to any law or regulation or altered requirements of the government of any jurisdiction or any governmental agency or any decision of any court including an alteration, addition or revocation which is appropriate or expedient as a result of an alteration to Australia's tax laws or any ruling by the Australian Commissioner or Deputy Commissioner of Taxation or any governmental announcement or statement or any decision of any court, which has or may have the effect of altering the manner or basis of taxation of trusts generally or of trusts similar to the Trust under the security trust deed; or
in the opinion of the Security Trustee is otherwise desirable for any reason.
If any alteration, addition or revocation referred to in the last bullet point above:
in the opinion of the Security Trustee, affects the Class A Noteholders, Class A-R Noteholders, Class B1 Noteholders, Class B1-R Noteholders or Class B2 Noteholders only or in a manner differently to the other Secured Creditors generally, alters the terms of the Class A Notes, Class A-R Notes, the Class B1 Notes, the Class B1-R Notes or the Class B2 Notes or is prejudicial to the interests of Class A Noteholders, the Class A-R Noteholders, the Class B1 Noteholders, the Class B1-R Noteholders or the Class B2 Noteholders, the alteration, addition or revocation will not be effective unless the consent of Class A Noteholders, Class A-R Noteholders, the Class B1 Noteholders, Class B1-R Noteholders and/or the Class B2 Noteholders, as applicable, owning 75% of the aggregate Invested Amount of the Class A Notes, Class A-R Notes, the Class B1 Notes, the Class B1-R Notes and/or the Class B2 Notes is obtained; or
has the effect of:
altering the date of payment, the method of calculating or order of priority of, payments under the security trust deed in respect of any principal or interest in respect of the Class of Subordinated Notes;
altering the currency in which payments under the Class of Subordinated Notes are to be made;
altering the majority required to pass an extraordinary resolution under the Security Trust Deed; or
sanctioning a scheme or proposal for the exchange or sale of the Class of Subordinated Notes, the conversion of the Class of Subordinated Notes for, or the cancellation of the Class of Subordinated Notes in consideration of, other obligations and/or securities of the Issuer Trustee or any other company,
the alteration, addition or revocation will not be effective unless the consent of Noteholders of each Class of Subordinated Notes affected owning 75% of the aggregate Invested Amount of the relevant Class of Subordinated Notes is obtained or the Security Trustee is of the opinion that the alteration, addition or revocation will not be materially prejudicial to the interests of each Class of Noteholders to which the alteration, addition or revocation applies.
Any alteration, addition or revocation must be notified to each rating agency 5 Business Days in advance.
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Interest Rate Swaps
Description of Interest Rate Swap Provider
The Manager and the Issuer Trustee have arrangements in place with the Interest Rate Swap Provider for the provision of interest rate swaps. As at the Closing Date, the Issuer Trustee will have entered into interest rate swaps with Macquarie Bank Limited on behalf of the Trust.
Macquarie Bank Limited has long term credit ratings of "A" by Fitch, "A2" by Moody’s and "A" by Standard & Poor’s as at the Preparation Date.
Description of Interest Rate Swap Arrangements
The Issuer Trustee may receive interest on the housing loans with two different types of interest rate. These are:
a variable rate; and
a fixed rate where the borrower has requested to fix their interest rate and the Manager and Issuer Trustee have consent to this.
This will result in an interest rate mismatch between the floating interest rate payable on the Notes on the one hand and the rate of interest earned on the housing loans on the other hand.
In order to eliminate the mismatch, on the Closing Date, the Issuer Trustee and the Manager will enter into a basis swap (the Basis Swap) and a fixed rate swap (the Fixed Rate Swap) with the Interest Rate Swap Provider.
The Basis Swap will apply in respect of any housing loan charged a variable rate of interest as at the Closing Date or which converts from a fixed rate to a variable rate after the Closing Date.
The Fixed Rate Swap will apply in respect of any housing loan charged a fixed rate of interest as at the Closing Date or which converts, subject to the restrictions described below, from a variable rate to a fixed rate of interest after the Closing Date.
The Fixed Rate Swap and the Basis Swap will each be governed by the terms of the Interest Rate Swap Master Agreement entered into by the Manager, the Issuer Trustee and the Interest Rate Swap Provider. The Interest Rate Swap Provider under the Fixed Rate Swap and the Basis Swap will be Macquarie Bank Limited. The Interest Rate Swap Master Agreement will be governed by the laws applying in the State of New South Wales.
The Basis Swap
The Interest Rate Swap Provider will provide the Basis Swap to the Issuer Trustee to enable the Issuer Trustee to hedge the interest rate mismatch between the interest rates being charged on the housing loans at a variable rate on the one hand and the floating interest rate payable on the Notes on the other hand.
Under the Basis Swap, the Issuer Trustee will pay to the Interest Rate Swap Provider on each Monthly Payment Date the Variable Rate Finance Charges for the Calculation Period ending on that Monthly Payment Date.
Under the Basis Swap, the Variable Rate Finance Charges for a Calculation Period are the aggregate Finance Charge Collections for the Collection Period ending on or immediately preceding the last day of that Calculation Period, excluding those Finance Charge Collections which are:
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all debit entries representing charges (other than interest charges) that have been charged during that period made to the accounts established in the records for those housing loans;
any Recoveries received by the Issuer Trustee under or in respect of the housing loans during that period (less any reversals made during the period in respect of Recoveries where the original debit entry (or part thereof) was in error);
all amounts of accrued interest or arrears of interest received under or in respect of any sale or transfer of any of the housing loans pursuant to the Transaction Documents during the period; and
any amount in respect of damages or pursuant to an indemnity received by the Issuer Trustee as a result of a breach of any representation or warranty or undertaking by any party to the Transaction Documents which represents amounts on account of interest, as determined by the Manager,
in respect of each housing loan charged interest at a variable rate of interest during all or any relevant part of that Monthly Period.
The Interest Rate Swap Provider will in turn pay to the Issuer Trustee on each Monthly Payment Date an amount calculated by reference to the Bank Bill Rate plus a margin based on the aggregate principal amount outstanding on the housing loans (excluding those being charged a fixed rate) as at the opening of business on the first day of the Monthly Period in respect of which the Variable Rate Finance Charges for the Calculation Period ending on that Monthly Payment Date are calculated. The margin over the Bank Bill Rate payable by the Interest Rate Swap Provider is calculated by reference to the weighted average margin of the Notes and continues over the life of the Basis Swap.
If at any time the Basis Swap terminates on or prior to its scheduled termination date and no replacement swap or other arrangements have been entered into, the Manager will, from the period commencing on the Adjustment Date in respect of that termination until the date on which a new Basis Swap (or other arrangement satisfactory to the Manager and the Issuer Trustee and in respect of which the Manager has confirmed, after providing notice to each rating agency, that the entering into of such arrangement will not result in a downgrading, withdrawal or qualification of any rating then assigned to the Notes) is entered into, determine whether the amount of income produced by the housing loans forming part of the assets of the Trust when aggregated with any other resources available to the Issuer Trustee (including amounts payable to the Issuer Trustee under the Interest Rate Swap Master Agreement and any reserves (as advised by the Manager)) is sufficient to enable the Issuer Trustee to comply with all of its obligations under the Transaction Documents as they fall due. If such amount is insufficient, the Manager must procure that the weighted average of the variable rates in respect of the housing loans forming part of the assets of the Trust is at least equal to the greater of:
the Threshold Rate calculated on that Adjustment Date; or
the rate of interest which produces an amount of income which is sufficient, when aggregated with the income produced by each other housing loans then forming part of the assets of the Trust and any other resources available to the Issuer Trustee, to enable the Issuer Trustee to comply with all of its obligations under the Transaction Documents as they fall due.
Fixed Rate Swap
The Interest Rate Swap Provider will provide the Fixed Rate Swap to the Issuer Trustee to enable the Issuer Trustee to hedge the interest rate mismatch between the interest rates being charged on housing loans at a fixed rate on the one hand and the floating interest rate payable on the Notes on the other hand.
Under the Fixed Rate Swap, the Issuer Trustee will pay to the Interest Rate Swap Provider on each Monthly Payment Date, the Fixed Rate Finance Charges for the Calculation Period ending on that Monthly Payment Date.
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Under the Fixed Rate Swap, the Fixed Rate Finance Charges for a Calculation Period are the aggregate Finance Charge Collections for the Collection Period ending on or immediately preceding the last day of that Calculation Period, excluding those Finance Charge Collections which are:
all debit entries representing charges (other than interest charges) that have been charged during that period made to the accounts established in the records for those housing loans;
any Recoveries received by the Issuer Trustee under or in respect of the housing loans during that period (less any reversals made during the period in respect of Recoveries where the original debit entry (or part thereof) was in error);
all amounts of accrued interest or arrears of interest received under or in respect of any sale or transfer of any of the housing loans pursuant to the Transaction Documents during the period; and
any amount in respect of damages or pursuant to an indemnity received by the Issuer Trustee as a result of a breach of any representation or warranty or undertaking by any party to the Transaction Documents which represents amounts on account of interest, as determined by the Manager,
in respect of each housing loan charged interest at a fixed rate of interest during all or any relevant part of that Monthly Period.
The Interest Rate Swap Provider will in turn pay to the Issuer Trustee on each Monthly Payment Date an amount calculated by reference to the Bank Bill Rate plus a margin and based on the aggregate principal amount outstanding on the fixed rate housing loans as at the opening of business on the first day of the Monthly Period in respect of which the Fixed Rate Finance Charges for the Calculation Period ending on that Monthly Payment Date are calculated. The margin over the Bank Bill Rate payable by the Interest Rate Swap Provider is calculated by reference to the weighted average margin of the Notes and continues over the life of the Fixed Rate Swap.
In certain circumstances where the Interest Rate Swap Provider does not have the credit ratings required by S&P and/or Fitch Ratings, the Interest Rate Swap Provider may lodge cash or other collateral to support its obligations in respect of the relevant interest rate swap. To the extent that such collateral forms part of the assets of the Trust, the Interest Rate Swap Provider will be entitled to repayment of that collateral on enforcement of the security trust deed in priority to Noteholders but only to the extent that the Issuer Trustee is not entitled to utilise the collateral under the terms of the relevant interest rate swap agreement.
Early Termination
The Interest Rate Swap Provider or the Issuer Trustee may only terminate the Basis Swap and the Fixed Rate Swap if among others:
(a) there is a payment default which continues for 10 days after notice by the non-defaulting party;
(b) the performance by the Interest Rate Swap Provider or the Issuer Trustee of any obligations under the Interest Rate Swap Master Agreement becomes illegal due to a change in law;
(c) the Security under the security trust deed is enforced; or
(d) in relation to the Fixed Rate Swap only, in circumstances where the Interest Rate Swap Provider does not have the credit rating required by S&P and/or Fitch Ratings, the Interest Rate Swap Provider fails to lodge cash or other collateral to support its obligations in respect of the relevant interest rate swap.
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Termination of Swaps
If not previously terminated, the Basis Swap terminates on the earlier of the:
(a) the date on which the balance of the assets of the Trust is reduced to zero;
(b) the date on which all of the Notes issued under the Trust have been repaid in full; and
(c) the Monthly Payment Date occurring in October 2045.
The Fixed Rate Swap terminates on the earlier of the:
(a) the date on which the balance of the assets of the Trust is reduced to zero;
(b) the date on which all of the Notes issued under the Trust have been repaid in full; and
(c) the Monthly Payment Date occurring in October 2045.
Other Interest Rate Swap Providers
The Issuer Trustee, at the direction of the Manager, may in the future enter into or obtain the benefit of interest rate swaps with other Interest Rate Swap Providers, provided that each other Interest Rate Swap Provider has at least the minimum credit rating specified by each rating agency, if any, in order to provide such interest rate swaps to the Trust.
The Redraw Facility
Redraw Facility Provider
The initial redraw facility provider is Macquarie Bank Limited. For a description of Macquarie Bank Limited, see "The Issuer Trustee, Macquarie Bank Limited and the Manager—Macquarie Bank Limited" above.
Advances and Redraw Facility Limit
Under the redraw facility agreement, the redraw facility provider agrees to make advances, at the request and in the discretion of the Manager, to the Issuer Trustee for the purposes of funding Redraws or Subordinate Further Advances, acquiring housing loans as assets of the Trust which at acquisition have a Subordinate Further Advance Amount (to the extent of that Subordinate Further Advance Amount) and repaying outstanding advances under the redraw facility agreement.
The redraw facility provider agrees to make advances to the Issuer Trustee up to the redraw facility limit. The redraw facility limit is equal to the lesser of:
0.25% of the Total Invested Amount of all Notes issued on the Closing Date; and
the amount, if any, to which the Manager or the Issuer Trustee has reduced the redraw facility limit,
or is such greater or lesser amount as is agreed by the redraw facility provider and the Manager provided that, in the case of an increase in the redraw facility limit, the Manager is satisfied that this will not result in a downgrade, qualification or withdrawal of the credit ratings assigned to the Notes.
Conditions Precedent to Drawing
The redraw facility provider is only obliged to make an advance if:
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no event of default under the redraw facility or under the security trust deed exists or will result from the provision of the advance;
the representations and warranties by the Issuer Trustee and the Manager in all Transaction Documents are true and correct as of the date of the relevant drawdown notice and the date of the relevant drawdown;
each housing loan has the benefit of a mortgage insurance policy from a solvent insurer providing full cover for the principal of, and interest on, the housing loan, other than any principal or interest in respect of Subordinate Further Advances;
other than statutory priorities, the redraw facility provider has not received notice of any security interest ranking in priority to or equal with its security under the security trust deed except as provided under the security trust deed; and
the Notes have been issued and have not been redeemed in full.
Interest and Fees under the Redraw Facility
Interest accrues daily on the principal outstanding under the redraw facility at the Bank Bill Rate plus a margin, calculated on the number of days elapsed and a 365 day year. Interest is payable in accordance with the sub-fund notice monthly in arrears on each Monthly Payment Date to the extent that funds are available for this purpose, as described under the heading "Description of the Cashflows of the Trust— Distribution of the Available Principal Amount" above. Unpaid interest will be capitalised and will accrue interest from the date not paid.
A 0.50% per annum commitment fee with respect to the unutilised portion of the redraw limit accrues daily, calculated on the number of days elapsed and a 365 day year. The commitment fee is payable in accordance with the sub-fund notice monthly in arrears on each Monthly Payment Date to the extent that funds are available for this purpose, as described under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" above.
The interest rate and the commitment fee under the redraw facility may be varied by agreement between the redraw facility provider and the Manager provided that, in the case of an increase in the interest rate or the commitment fee, the Manager is satisfied that such increase will not result in the downgrading, qualification or withdrawal of the credit ratings assigned to the Notes then outstanding.
Repayment of Redraw Advances
Advances under the redraw facility are repayable on each Monthly Payment Date, as described under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount" above, from the funds available for this purpose in accordance with the sub-fund notice.
Advances drawn under the redraw facility can be divided into two categories, namely:
advances which do not relate to Subordinate Further Advances; and
advances which relate to Subordinate Further Advances.
The repayment of these two categories is treated differently.
The redraw facility provider will, prior to enforcement of the Security granted under the security trust deed:
rank equally with Class A Noteholders and, if any, the Class A-R Noteholders and ahead of the Class B1 Noteholders, the Class B1-R Noteholders and the Class B2 Noteholders, with respect to the
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payment of an amount of the outstanding interest and fees on the redraw facility equal to the Senior Redraw Facility Interest Amount; and
rank ahead of all Noteholders, with respect to repayment of a principal amount equal to the Senior Redraw Facility Principal.
Upon enforcement of the Security granted under the security trust deed, the redraw facility provider will rank equally with the Class A Noteholders and, if any, the Class A-R Noteholders and ahead of the Class B1 Noteholders, the Class B1-R Noteholders and Class B2 Noteholders, with respect to payment of amounts owing to the redraw facility provider in respect of the Senior Redraw Facility Principal and the Senior Redraw Facility Interest Amount.
The redraw facility provider will be subordinated to all Noteholders, both prior to and upon enforcement of the Security granted under the security trust deed, with respect to:
the principal amount of the redraw facility equal to the Subordinate Further Advance Amount which represents the extent to which Subordinate Further Advances have been made by the Issuer Trustee on housing loans, whether before or after acquisition of the housing loan by the Trust, and have not yet been repaid by the relevant borrower; and
a part of the outstanding interest and fees on the redraw facility bearing the same proportion to the total outstanding interest and fees of the redraw facility as the Subordinate Further Advance Amount bears to the outstanding principal of the redraw facility.
For a full description of the priorities of payment of amounts under the redraw facility prior to enforcement of the Security granted under the security trust deed see "Description of the Cashflows of the Trust—Distribution of the Available Income Amount". For a full description of the priorities of payment of amounts under the redraw facility upon enforcement of the Security granted under the security trust deed, see "Description of the Transaction Documents and Parties—The Security Trust Deed—Priorities Under the Security Trust Deed".
The Issuer Trustee will not make any Senior Further Advance in respect of a housing loan in the Trust. In the event that the borrower under a housing loan requests a Senior Further Advance in relation to that housing loan and the Manager wishes to agree to that request, the Manager must direct the Issuer Trustee to sell that housing loan to another PUMA trust. Please refer to the "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances—Funding of Senior Further Advances".
Events of Default under the Redraw Facility Agreement
The following are events of default under the redraw facility:
the Issuer Trustee fails to pay to the redraw facility provider any amount owing under the redraw facility agreement within 10 days of its due date where funds are available for this purpose under the sub-fund notice;
the Issuer Trustee alters the Transaction Documents without the consent of the redraw facility provider at any time after Macquarie Bank Limited no longer controls the Manager; and
an event of default occurs under the security trust deed.
Consequences of an Event of Default
At any time after an event of default under the redraw facility agreement, the redraw facility provider may do all or any of the following:
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declare all moneys actually or contingently owing under the redraw facility agreement immediately due and payable; and
terminate the redraw facility.
Termination
The redraw facility will terminate upon the earlier to occur of the following:
the date on which the redraw facility limit is reduced to zero in the manner described under the heading "Description of Transaction Documents and Parties—The Redraw Facility— Advances and Facility Limit";
the date on which the redraw facility provider declares the redraw facility terminated following an event of default under the redraw facility agreement;
where it becomes unlawful or impossible for the redraw facility provider to maintain or give effect to its obligations under the redraw facility agreement, the date appointed by the redraw facility provider as the termination date of the redraw facility; and
the earliest of:
the Final Maturity Date;
the date on which the balance of the assets of the Trust is reduced to zero; and
the date on which all of the Notes issued by the Issuer Trustee in respect of the Trust have been repaid or redeemed in full.
Increased Costs
If by reason of any change in law or its interpretation or administration or because of compliance with any request from any fiscal, monetary or other authority, the redraw facility provider incurs new or increased costs, obtains reduced payments or returns or becomes liable to make any payment based on the amount of advances outstanding under the redraw facility agreement, the Issuer Trustee must pay the redraw facility provider an amount sufficient to indemnify it against that cost, increased cost, reduction or liability.
Replacement of the Redraw Facility Provider
The redraw facility provider, with the consent of the Manager, may at any time transfer its rights and obligations under the redraw facility to another bank or financial institution, provided that such transfer does not result in a reduction, qualification or withdrawal of the then rating of the Notes by each rating agency and provided that each rating agency is notified of the transfer.
If the redraw facility is terminated the Issuer Trustee, upon the direction of the Manager, may enter into a replacement redraw facility with a new redraw facility provider.
Changes to Transaction Documents
Subject to the provisions, some of which are described above, in relation to amendments to the Trust Deed, the Notes, the sub-fund notice or the security trust deed, the Issuer Trustee and the Manager may, subject to the terms of the Transaction Documents, agree to amend or terminate any Transaction Document, and may enter into new Transaction Documents, after the relevant Notes have been issued and without the consent of the Noteholders, provided that the Manager is satisfied that this will not result in a downgrading, withdrawal or qualification of the ratings given to the Notes by that rating agency.
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In particular, the Issuer Trustee may in the future enter into a liquidity facility agreement if the Manager considers this necessary or appropriate and the Manager is satisfied that this will not result in a reduction, qualification or withdrawal of the ratings given by that rating agency. Any such liquidity facility would be a Support Facility and any principal, interest and fees payable by the Issuer Trustee to any such liquidity facility provider will be payable in accordance with the priority set forth under the heading "Description of the Cashflows of the Trust – Distribution of the Available Income Amount" above with respect to amounts payable to any provider of a Support Facility.
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TAXATION – AUSTRALIAN TAX CONSEQUENCES
This section contains a summary of certain tax consequences that may affect holders of Offered Notes, based on current law and administrative practice. It should be noted that revenue authorities may take a different view and there is a risk that the operation of the tax laws can be altered by a change in law, interpretation or application, potentially in a manner which may apply retrospectively to a completed transaction. The following is not intended to be, and should not be taken as, a comprehensive taxation summary for prospective investors. Any prospective investor should, prior to investing in the Offered Notes, obtain its own independent tax advice. This taxation section does not apply to, and its conclusions should not be read in relation to, any Refinancing Notes.
Payments of Interest
Onshore Noteholders
The Noteholders will derive interest income from their Notes. Under the terms of the Notes, interest income on the Notes will accrue on a monthly basis. The Noteholders will, if Australian residents, or if foreign residents acquiring the Notes at or through an Australian permanent establishment, be assessable on this interest income for tax purposes. Whether this interest income will be recognised on a cash receipts or accruals basis for tax purposes will depend upon the tax status of the particular Noteholder. Noteholders will generally be required to lodge an Australian tax return.
If a Noteholder is an Australian resident (other than one that holds the Notes at or through a permanent establishment outside Australia) or a non-resident that holds the Notes at or through a permanent establishment in Australia, no interest withholding tax will be payable.
However, a non-final withholding tax equal to the top marginal tax rate plus Medicare levy (currently 49%) will be deducted, unless that Noteholder supplies its tax file number, Australian business number (where applicable) or proof of appropriate exemption to quote such numbers. Any such tax withheld will be credited against any Australian income tax by assessment in respect of interest derived from the Notes.
Offshore Noteholders
Non-resident Noteholders, other than persons holding such securities as part of a business carried on at or through a permanent establishment in Australia, are not subject to Australian income tax by assessment on payments of interest or amounts in the nature of interest paid by an Australian resident. However, such non-resident Noteholders may be subject to Australian interest withholding tax on interest or amounts in the nature of interest paid on the Notes, currently at the rate of 10% of the gross amount of interest, subject to any applicable exemption (discussed below).
Australian resident Noteholders who hold such securities or interest as part of a business carried on at or through a permanent establishment in a country outside Australia are also subject to Australian interest withholding tax on payments of interest or amounts in the nature of interest (subject to any applicable exemption) and in addition may also be subject to Australian income tax by assessment on these amounts.
Pursuant to section 128F of the ITAA 1936, an exemption from Australian interest withholding tax applies to interest paid where:
at the time the relevant Notes are issued and the interest is paid, the issuer is a company (which includes a company acting as a trustee of an Australian trust estate, provided that all beneficiaries or potential beneficiaries are companies) that is either a resident of Australia, or a non-resident carrying on business at or through an Australian permanent establishment; and
the relevant Notes were issued in a manner which satisfies the "public offer test".
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The Issuer Trustee will seek to issue the Class A Notes (but not the Class B1 Notes or the Class B2 Notes) in a way that will satisfy the public offer test and otherwise meet the requirements of section 128F of the ITAA 1936.
Importantly, the public offer test will not be satisfied if, at the time of issue, the Issuer Trustee knew or had reasonable grounds to suspect that the Class A Notes were being or would later be acquired directly or indirectly by an Offshore Associate of the Issuer Trustee or the Manager, other than in the capacity of a dealer, manager or underwriter in relation to the placement of the relevant Class A Notes, or a clearing house, custodian, funds manager or responsible entity of a registered scheme.
The exemption from Australian withholding tax will also not apply to interest paid by the Issuer Trustee to an Offshore Associate of the Issuer Trustee or Manager if, at the time of the payment, the Issuer Trustee knows, or has reasonable grounds to suspect, that such person is an Offshore Associate and the Offshore Associate does not receive the payment in the capacity of a clearing house, paying agent, custodian, funds manager or responsible entity of a registered scheme.
An Offshore Associate (Offshore Associate) means an “associate” (as defined in section 128F(9) of the ITAA 1936, and which includes amongst other things persons under common control or influence) of the Issuer Trustee or the Manager that is either:
a non-resident of Australia that does not acquire the Class A Notes or an interest in the Class A Notes in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or
a resident of Australia that acquires the Class A Notes or an interest in the Class A Notes in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country.
Accordingly, the Class A Notes should not be acquired by any Offshore Associate of the Issuer Trustee or the Manager (which will include associates of Macquarie Group Limited) except in the circumstances listed above.
Double Tax Treaties
The Australian government has signed a number of double tax treaties (Specified Treaties) with certain countries including the United States of America, the United Kingdom, Norway, Finland, the Republic of France, Japan, the Republic of South Africa and New Zealand (each a Specified Country). The Specified Treaties apply to interest derived by a resident of a Specified Country in relation to a Note.
The Specified Treaties effectively prevent withholding tax applying to interest derived by:
(a) the government of the relevant Specified Country and certain governmental authorities and agencies in the Specified Country; and
(b) certain unrelated banks, and financial institutions which substantially derive their profits by carrying on a business of raising and providing finance, which are resident in the Specified Country and dealing wholly independently with the Issuer Trustee (however, back-to-back loans and economically equivalent arrangements will not obtain the benefit of the reduction in interest withholding tax and the anti-avoidance provisions in the ITAA 1936 can apply),
by reducing the interest withholding tax rate to zero. Particular tax treaties may have additional requirements. Potential Noteholders should obtain their own independent tax advice as to whether any of the exemptions under the relevant Treaties apply to their particular circumstances.
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All Specified Treaties listed above are currently in effect. Switzerland has recently been added to this list, though the treaty is not yet in force.
Exemption for superannuation funds
An exemption is also available in respect of interest paid to a non-resident superannuation fund where that fund is a superannuation fund maintained solely for foreign residents and the interest arising from the Notes is exempt from income tax in the country in which such superannuation fund is resident.
Taxation of profit on sale
If a Noteholder is an Australian resident for tax purposes, or a foreign resident acquiring the Notes at or through an Australian permanent establishment, the Noteholder will be assessable on any profit on disposal of the Notes.
Under current Australian tax law, non-resident holders of the Notes who have never held the Notes in carrying on business through a permanent establishment in Australia will not be subject to Australian income tax on profits derived from the sale or disposal of the Notes where the profits do not have an Australian source.
The source of any profit on the disposal of Notes will depend on the factual circumstances of the actual disposal. Generally, where the Notes are acquired and disposed of pursuant to contractual arrangements entered into and concluded outside Australia, and the seller and the purchaser are non-residents of Australia and do not have an Australian permanent establishment, the profits should not have an Australian source.
The statements above are not intended to be, and should not be taken as, a comprehensive taxation summary for prospective investors. Any prospective investor should, prior to investing in the Notes, obtain its own independent tax advice in respect of the matters discussed above.
Income Tax Treatment of the Trust
Any income tax related liabilities of the Trust may mean that less money is available to pay interest on the Notes or other liabilities of the Trust.
As the Trust is wholly owned by the Macquarie Group, and is a member of the Macquarie Group tax consolidated group, it will be taken to be a part of the head company of the tax consolidated group for most Australian income tax purposes. The primary responsibility for income tax liabilities rests with the head company of a tax consolidated group. As a result, the Trust will not be subject to any income tax liability in respect of the income of the Trust in the first instance. Members of a tax consolidated group (including the Trust) can in some circumstances become jointly and severally liable for the tax-related liabilities of the group where the head company of the group defaults on those tax liabilities. However, where the members of that group have entered into a valid and effective tax sharing arrangement, the liability of each member, including the Trust, will be limited to a reasonable allocation of the group's tax liabilities. Under the Macquarie Group tax consolidated group's tax sharing deed, subject to certain assumptions regarding the operation of the Trust, the Trust would have a nil allocation of that group's tax liabilities.
Assuming that the allocation methodology in the tax sharing agreement is accepted by the Australian Commissioner of Taxation as being reasonable, and subject to certain other assumptions regarding that agreement, it is the opinion of Allen & Overy that the Macquarie Group tax consolidated group's tax sharing agreement would be regarded as valid and effective. It is possible that the Commissioner of Taxation could take a different view, and any ultimate determination rests with the Courts.
We note that the Australian Taxation Office (ATO) has released a draft ruling setting out its views in relation to the current taxation treatment of trusts. The views in the draft ruling are novel in some respects and may impact the Trust in certain circumstances. However, provided that the distributable income of the
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Trust is reflected by a true net accretion in the property or value of the Trust, the views in the draft ruling should not impact the Trust.
The Australian Government has announced proposed changes to update the law regarding taxation of trusts generally. Depending on the final form of the legislation, the law could be amended in a way that would cause the Trust to become subject to a liability in respect of taxes (including under the tax consolidated group’s tax sharing deed), however, no draft legislation has been released. The proposed changes are in consultation phase only, and remain subject to change.
Goods and Services Tax
Goods and services tax (GST) is payable by all entities which make taxable supplies in Australia. The GST legislation adopts a broad meaning of the term "entity", including legal constructs such as partnerships and trusts within that term. Accordingly, the Trust will be treated as a separate entity that makes supplies and acquisitions for GST purposes. Unless otherwise stated, a reference to the Issuer Trustee in this part is a reference to the Issuer Trustee in its capacity as trustee of the Trust.
If an entity, such as the Issuer Trustee, makes a "taxable supply" it will have to pay GST equal to 1/11 of the total consideration that it receives for that supply (subject to the application of the market value substitution rules for supplies between associates).
However, a supply will only be taxable to the extent that it is not "GST-free" or "input taxed". Based on the current GST legislation, it is expected that the following supplies and acquisitions made by the Issuer Trustee would not constitute taxable supplies:
the issuance of Class A Notes, Class B1 Notes and Class B2 Notes;
the payment of interest on the Notes; and
the repayment of any principal on the Notes.
Generally, it is expected that these supplies would be treated as input taxed supplies or otherwise not subject to GST (in addition, certain supplies to non-residents outside of Australia may be GST-free).
If a supply by the Issuer Trustee is:
GST-free, the Issuer Trustee does not have to pay GST on the supply and can obtain an input tax credit for the GST included in the consideration provided for acquisitions to the extent they relate to the making of this supply; or
input taxed, which includes "financial supplies" as defined by regulation 40-5.09 of the A New Tax System (Goods and Services Tax) Regulations 1999, the Issuer Trustee does not have to pay GST on the supply, but will not be able to claim an input tax credit for GST included in the consideration provided for acquisitions to the extent they relate to the making of the input taxed supply, unless one of the relevant exceptions applies to the acquisitions for example, the acquisitions are "reduced credit acquisitions".
Most of the services which would be acquired by the Issuer Trustee are expected to be taxable supplies. Where this is the case, it will generally be the service provider who is liable to pay GST in respect of that supply. Whether a service provider is able to recoup an additional amount from the Issuer Trustee on account of the service provider's GST liability will depend on the terms of the contract with that service provider.
If amounts payable by the Issuer Trustee are treated as the consideration for a taxable supply under the GST legislation and are increased by reference to the relevant supplier's GST liability on that supply, the Issuer Trustee may be entitled to claim an input tax credit for that increase. Because the majority of the supplies
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made by the Issuer Trustee are expected to be input-taxed, the Issuer Trustee may be restricted in its ability to claim an input tax credit for acquisitions to the extent that the acquisitions relate to the making of input taxed supplies by the Issuer Trustee. Where this is the case, the expenses to be indemnified out of the Trust assets will increase, resulting in a decrease in the funds available to the Issuer Trustee to pay Noteholders.
There are, however, three important circumstances in which the Issuer Trustee may be entitled to input tax credits in relation to input taxed supplies.
Firstly, a "reduced input tax credit" may be claimed for reduced credit acquisitions which relate to the making of financial supplies by the Issuer Trustee. Where available, the amount of the reduced input tax credit is currently either 55% or 75% of the GST payable by the service provider on the taxable supplies made to the Issuer Trustee. The availability of reduced input tax credits will reduce the expenses of the Trust in respect of GST.
Secondly, an entity will not be precluded from claiming an input tax credit for an acquisition to the extent the acquisition relates to the making of financial supplies and the entity making the acquisition does not "exceed the financial acquisitions threshold".
Thirdly, an entity could be entitled to input tax credits for acquisitions relating to a financial supply that consists of a borrowing, provided that the borrowing relates to supplies that are not input taxed.
The acquisitions made by the Issuer Trustee from Perpetual Limited, in its personal capacity, the Manager, the Security Trustee and the Originators (insofar as they constitute the acquisition of origination services) may be acquisitions of taxable supplies. As such the fees paid by the Issuer Trustee for these supplies may include amounts on account of GST. However, where the supply of services by Perpetual Limited (in its personal capacity), the Manager, the Security Trustee and the Originators to the Issuer Trustee are taxable supplies, it is generally expected that the acquisition of these services by the Issuer Trustee would be reduced credit acquisitions. Accordingly, the Issuer Trustee should be entitled to a reduced input tax credit in respect of the acquisition of those services.
An entity may also be restricted in its ability to claim an input tax credit / reduced input tax credit for an amount that it pays where it does not make an acquisition of the supply for which the amount is paid. The Issuer Trustee may be precluded from claiming an input tax credit / reduced input tax credit in respect of any fee it pays to Perpetual Limited (in its personal capacity), the Security Trustee and the Originators for the performance of their servicing obligations to the Manager (as distinct from the Issuer Trustee).
Where the supply of services by Perpetual Limited (in its personal capacity), the Manager, the Security Trustee and the Originators to the Issuer Trustee gives rise to an entitlement to a reduced input tax credit, the impact of the GST may be considerably less than it otherwise would have been.
The GST may increase the cost of repairing or replacing damaged properties offered as security for housing loans. However, it is a condition of the Issuer Trustee's loan contract and mortgage documentation that the borrower must maintain full replacement value property insurance at all times during the loan term.
The GST legislation, in some circumstances, treats the Issuer Trustee as making a taxable supply if the Issuer Trustee enforces a security by selling the mortgaged property and applying the proceeds of sale to satisfy the housing loan. If the Issuer Trustee is treated as making a taxable supply, it will be required to pay GST. If this GST cannot be recouped, eg from the vendor, the Issuer Trustee may have to account for GST out of the sale proceeds, with the result that the remaining sale proceeds may be insufficient to cover the unpaid balance of the related loan. However, the general position is that a sale of existing residential property is an input taxed supply for GST purposes and so the enforced sale of property which secures the housing loan will generally not be treated as a taxable supply under these provisions. As an exception, the Issuer Trustee may still have to account for GST out of the proceeds of sale recovered when a housing loan is enforced
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where the borrower carries on an enterprise and is registered for GST purposes, uses the mortgaged property as an asset of its enterprise and any of the following are relevant:
the property can no longer be used as a residence;
the property is used as commercial residential premises such as a hostel or boarding house;
the borrower is the first vendor of the property – the borrower built the property and the property was not used for residential accommodation before 2 December 1998 and has not been used for leasing or similar activities as residential premises for at least 5 years since being built;
the borrower has undertaken substantial renovation of the property since 2 December 1998; or
the mortgaged property is not otherwise a residential premises to be used predominantly for residential accommodation (regardless of the term of occupation), at the time of the supply of the mortgaged property.
Any reduction as a result of GST in the amount recovered by the Issuer Trustee when enforcing the housing loan will decrease the funds available to the Issuer Trustee to pay Noteholders to the extent not covered by the mortgage insurance policies. The extent to which the Issuer Trustee is able to recover an amount on account of the GST, if any, payable on the proceeds of sale in the circumstances described in this section, will depend on the terms of the related mortgage insurance policy.
Other Taxes
Under the stamp duties laws (including administrative practices) of the Australian states or territories, no stamp duty should be payable in Australia in connection with the issue, transfer or the redemption of the Notes in any jurisdiction of Australia.
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TAXATION – FOREIGN ACCOUNT TAX COMPLIANCE ACT
Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (FATCA) impose a new reporting regime and potentially a 30% withholding tax with respect to certain payments to (i) any non-U.S. financial institution (a "foreign financial institution", or FFI (as defined by FATCA)) that does not become a Participating FFI by entering into an agreement with the U.S. Internal Revenue Service (IRS) to provide the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from or in deemed compliance with FATCA and (ii) any investor (unless otherwise exempt from FATCA) that does not provide information sufficient to determine whether the investor is a U.S. person or should otherwise be treated as holding a "United States account" of the Trust or the Issuer Trustee (a Recalcitrant Holder). The Trust or the Issuer Trustee may be classified as an FFI.
The new withholding regime will be phased in beginning 1 July 2014 for payments received from sources within the United States and will apply to "foreign passthru payments" (a term not yet defined) no earlier than 1 January 2017. This withholding would potentially apply to payments in respect of (i) any Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or after the "grandfathering date", which is the date that is six months after the date on which final U.S. Treasury regulations defining the term foreign passthru payment are filed with the Federal Register, or which are materially modified on or after the grandfathering date and (ii) any Notes characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued.
The United States and a number of other jurisdictions have announced their intention to enter into intergovernmental agreements to facilitate the implementation of FATCA (each, an IGA). Pursuant to FATCA and the "Model 1" and "Model 2" IGAs released by the United States, an FFI in an IGA signatory country could also be treated as a "Reporting FI" not subject to withholding under FATCA on any payments it receives. Further, an FFI in a Model 1 IGA jurisdiction generally would not be required to withhold under FATCA or an IGA (or any law implementing an IGA) (any such withholding being FATCA Withholding) from payments it makes. The Model 2 IGA leaves open the possibility that such a Reporting FI might in the future be required to withhold as a Participating FFI on foreign passthru payments and payments that it makes to Recalcitrant Holders. Under each Model IGA, a Reporting FI would still be required to report certain information in respect of its account holders and investors to its home government or to the IRS. The United States and Australia have entered into an agreement (the US-Australia IGA) based largely on the Model 1 IGA.
Assuming they are each treated as an FFI, it is expected that the Trust and the Issuer Trustee will be treated as Reporting FI’s pursuant to the US-Australia IGA and will not be obliged to deduct any FATCA Withholding on payments they make.
There can be no assurance, however, that the Trust and the Issuer Trustee will be treated as Reporting FI’s, or that they would in the future not be required to deduct FATCA Withholding from payments they make. The Issuer Trustee and financial institutions through which payments on the Notes are made may be required to withhold FATCA Withholding if (i) any FFI through or to which payment on such Notes is made is not a Participating FFI, a Reporting FI, or otherwise exempt from or in deemed compliance with FATCA or (ii) an investor is a Recalcitrant Holder.
Whilst the Notes are held within the Austraclear system, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Notes by the Issuer Trustee, given that each of the entities in the payment chain between the Issuer Trustee and the participants in the Austraclear system is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an IGA will be unlikely to affect the Notes.
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FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations, official guidance and the model IGAs, all of which are subject to change or may be implemented in a materially different form. Prospective investors should consult their own tax advisers on how these rules may apply to the Trust or the Issuer Trustee and to payments they may receive in connection with the Notes.
TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, EACH TAXPAYER IS HEREBY NOTIFIED THAT: (A) ANY TAX DISCUSSION HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY THE TAXPAYER FOR THE PURPOSE OF AVOIDING U.S. FEDERAL INCOME TAX PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER; (B) ANY SUCH TAX DISCUSSION WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) THE TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.
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RATINGS OF THE NOTES
The issuance of the Class A Notes will be conditioned on obtaining a rating of AAAsf by Fitch and AAA (sf) by S&P. The issuance of the Class B1 Notes will be conditioned on obtaining a rating of AAA (sf) by S&P. The issuance of the Class B2 Notes will not be conditioned on obtaining a rating. You should independently evaluate the security ratings of each class of Initial Notes from similar ratings on other types of securities. A security rating is not a recommendation to buy, sell or hold securities. A rating does not address the market price or suitability of the Initial Notes for you. A rating may be subject to revision or withdrawal at any time by a rating agency. The rating does not address the expected schedule of principal repayments other than to say that each of the rating agencies expect that principal will be returned no later than the Final Maturity Date of the Notes. The ratings of the Notes will be based primarily on the creditworthiness of the housing loans, the availability of Available Income Amounts after payment of interest on the Notes and the Trust’s expenses, the mortgage insurance policies and the creditworthiness of the swap providers and the mortgage insurers. None of the rating agencies has been involved in the preparation of this Information Memorandum.
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SELLING RESTRICTIONS
Australian Selling Restrictions
No disclosure document in relation to Notes has been (or will be) lodged with, or registered by, the ASIC and no action has been (or will be) taken which would permit a public offering of any Notes, or possession or distribution of this Information Memorandum or any other offering material, or any other material issued by or on behalf of the Manager or the Issuer Trustee, in relation to the Notes in any country or jurisdiction where action for that purpose is required (including without limitation, in Australia).
Each of the Joint Lead Managers has agreed that it has not and will not offer directly or indirectly for issue, or invite applications for the issue of any Offered Notes or offer any such Offered Notes for sale or invite offers to purchase any such Offered Notes to a person, where the offer or invitation is received by that person in Australia and will not sell any such Offered Notes to a person, unless:
the minimum amount payable for those Offered Notes (after disregarding any amount lent by the Joint Lead Manager or any associate (as determined under sections 10 to 17 of the Corporations Act) of the Joint Lead Manager) on acceptance of the offer by that person is at least $500,000; or
the offer, invitation or sale otherwise does not require disclosure to investors under Part 6D.2 of the Corporations Act and is not made to a person who is a "retail client" within the meaning of section 761G of the Corporations Act,
and, in either case, the offer invitation or sale satisfies all applicable laws and directions and does not require any document to be lodged with, or registered by, ASIC.
U.S. Selling Restrictions
The Offered Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act) and may not be offered or sold within the United States or to, or for the account or benefit of, US persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Each of the Joint Lead Managers has agreed that it will offer and sell the Offered Notes in the United States of America or to US persons:
as part of their distribution at any time; and
otherwise until 40 days after the completion of distribution of the Offered Notes (as determined and notified to the Joint Lead Managers by the Manager following notification by the Joint Lead Managers to the Manager of completion of distribution of the relevant Offered Notes purchased by or through it),
only in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.
Each of the Joint Lead Managers has agreed that neither its affiliates (if any) nor any person acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Offered Notes, and the Joint Lead Manager, its affiliates (if any) and any person acting on its or their behalf have complied and will comply with the offering restrictions requirements of Regulation S.
Each of Joint Lead Managers has also agreed that, at or prior to confirmation of sale of the Offered Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration
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that purchases Offered Notes from it or through it during the restricted period a confirmation or notice setting forth the restriction on offers and sales of the Offered Notes within the United States of America or to, or for the benefit of, US persons.
In addition, until 40 days after the commencement of the offering of the Offered Notes, any offer or sale of the Offered Notes within the United States of America by the Joint Lead Manager whether or not participating in the offering may violate the registration requirements of the Securities Act.
General Selling Restrictions
The distribution of this Information Memorandum and the offering and sale of the Offered Notes in certain other foreign jurisdictions may be restricted by law. The Offered Notes may not be offered or sold, directly or indirectly, and neither this Information Memorandum nor any form of application, advertisement or other offering material may be issued, distributed or published in any country or jurisdiction, unless permitted under all applicable laws and regulations. Each of the Joint Lead Managers has agreed to comply with all applicable securities laws and regulations in each jurisdiction in which it purchases, offers, sells or delivers the Offered Notes or possesses or distributes this Information Memorandum or any other offering material.
Note the information contained in the section entitled "Important Notice—Disclosure of Interests" above.
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ANNOUNCEMENT
By distributing or arranging for the distribution of this Information Memorandum to the Joint Lead Managers and the persons to whom this Information Memorandum is distributed, the Issuer Trustee announces to the Joint Lead Managers and each such person that:
the Class A Notes, the Class B1 Notes and the Class B2 Notes will initially be issued to and will be held by Austraclear;
in connection with the issue, Austraclear will confer rights in the Class A Notes, the Class B1 Notes and the Class B2 Notes and will record the existence of those rights; and
as a result of the issue of the Class A Notes, the Class B1 Notes and the Class B2 Notes in this manner, these rights will be created.
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TRANSACTION DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents may be inspected during normal business hours on any weekday, excluding Saturdays, Sundays and public holidays, at the offices of the Manager:
the constitution documents of the Issuer Trustee;
the Consolidated PUMA Trust Deed dated 13 July 1990 between the Issuer Trustee and the person referred to therein as the Founder, as amended from time to time;
the Sub-Fund Notice dated before the Closing Date between the Issuer Trustee and the Manager;
the Security Trust Deed dated before the Closing Date between the Issuer Trustee, the Manager and the Security Trustee;
the Redraw Facility Agreement dated before the Closing Date between the Issuer Trustee, the Manager and the Redraw Facility Provider;
the Dealer Agreement dated before the Closing Date between the Issuer Trustee, the Manager and each of the Joint Lead Managers (the Dealer Agreement);
the ISDA Master Agreement dated 3 February 2005 between the Issuer Trustee, the Manager and Macquarie Bank Limited, as amended from time to time; and
the Transfer Proposal dated on the Closing Date from the Manager to the Issuer Trustee.
However, any person wishing to inspect these documents must first enter into a confidentiality agreement in a form acceptable to the Issuer Trustee and the Manager whereby that person undertakes not to disclose the contents of the documents without the prior consent of the Issuer Trustee and the Manager.
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GLOSSARY
The contents of this Glossary forms an integral part of this Information Memorandum..
Accrued Interest Adjustment ............................. See heading "Description of the Cashflows of the Trust—Payments of accrued interest to disposing PUMA trust".
Adjustment Date .................................................. in relation to the termination of the Basis Swap means the later of:
(a) the third Business Day after such termination; and
(b) the earliest time by which the Issuer Trustee is permitted by any binding provision or the terms of any housing loans then forming part of the assets of the Trust subject to a variable rate of interest to increase that interest rate in respect of such housing loans.
Adjustment Advance ........................................... means, in relation to a tranche of housing loans to be transferred from a disposing PUMA trust to the Trust, an amount, as determined by the Manager and specified in a transfer proposal to the Trustee, not exceeding an amount equal to the accrued and unpaid interest in respect of the tranche of housing loans less any accrued but unpaid costs and expenses in respect of the tranche of housing loans during the period up to (but not including) the date of that transfer.
APRA .................................................................... means the Australian Prudential Regulation Authority.
ASIC ..................................................................... means the Australian Securities and Investments Commission
ASX ....................................................................... means the Australian Securities Exchange.
Authorised Investments ...................................... see heading "Description of the Assets of the Trust—Other Assets of the Trust—Other Authorised Investments".
Available Income Amount .................................. see heading "Description of the Cashflows of the Trust—Determination of the Available Income Amount".
Available Principal Amount ............................... see heading "Description of the Cashflows of the Trust—Determination of the Available Principal Amount".
Bank Bill Rate ...................................................... in relation to a date and a specified term means the rate appearing at approximately 10:10 a.m. Sydney time on that date on the Reuters Screen page "BBSW" as being
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the average of the mean buying and selling rates appearing on that page for a bill of exchange having a tenor equal to that specified term, rounded to 4 decimal places. If fewer than four banks quote on the Reuters Screen page "BBSW" and the Manager cannot obtain a similar rate from four banks in the manner specified in the sub-fund notice then Bank Bill Rate means the rate specified by the Manager in good faith having regard to comparable indices then available.
Basis Swap ............................................................ means the basis swap transaction, as evidenced by a confirmation that supplements, forms part of and is subject to the Interest Rate Swap Master Agreement pursuant to which the Issuer Trustee pays to the Interest Rate Swap Provider an amount in respect of the housing loans forming part of the assets of the Trust that do not bear interest at a fixed rate and the Interest Rate Swap Provider pays to the Issuer Trustee an amount calculated by reference to the Bank Bill Rate.
Business Day ........................................................ means any day on which banks are open for business in Sydney and Melbourne, other than a Saturday, a Sunday or a public holiday in Sydney or Melbourne.
Calculation Period ............................................... has the meaning given in the 2006 ISDA Definitions (published by the International Swaps and Derivatives Association, Inc).
Call Date ............................................................... means the Monthly Payment Date in relation to which the Manager reasonably expects (on the day 10 Business Days prior to that Monthly Payment Date) that the aggregate of the Invested Amounts of the Class A Notes, the Class A-R Notes, the Class B1 Notes, the Class B1-R Notes and the Class B2 Notes will, for the first time, be less than or equal to the Call Date Total Invested Amount.
Call Date Total Invested Amount ...................... means, at any time, the value (specified as an A$ amount) which is 10% of the aggregate of the Initial Invested Amount of:
all Class A Notes;
all Class B1 Notes; and
all Class B2 Notes,
which were issued on the Closing Date.
Charge .................................................................. see heading "Description of the Transaction Documents and Parties —The Security Trust Deed—General".
Charge-Off ........................................................... means a Class A Charge-Off, a Class A-R Charge-Off, a Class B1 Charge-Off, a Class B1-R Charge-Off or a Class B2 Charge-Off.
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Class A Charge-Off ............................................. means, in relation to the Class A Notes, all amounts charged off against the Stated Amount of the Class A Notes.
Class A Note ......................................................... see heading "Summary—Summary of the Notes".
Class A Note Refinancing Closing Date ............. see heading "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
Class A-R Charge-Off ......................................... means, in relation to the Class A-R Notes, all amounts charged off against the Stated Amount of the Class A-R Notes.
Class A-R Note ..................................................... A note identified as such and issued at the Manager’s option for the purpose of refinancing the Class A Notes and/or the Class B1 Notes as described in "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
Class B1 Charge-Off ........................................... means, in relation to the Class B1 Notes, all amounts charged off against the Stated Amount of the Class B1 Notes.
Class B1 Note ....................................................... see heading "Summary—Summary of the Notes".
Class B1 Note Refinancing Closing Date ........... see heading "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
Class B1-R Charge-Off ....................................... means, in relation to the Class B1-R Notes, all amounts charged off against the Stated Amount of the Class B1-R Notes.
Class B1-R Note ................................................... A note identified as such and issued at the Manager’s option for the purpose of refinancing the Class A Notes and/or the Class B1 Notes as contemplated under the heading "Description of the Notes—Redemption of the Notes—Optional Redemption of the Class A Notes and the Class B1 Notes on or after the Scheduled Maturity Date".
Class B2 Charge-Off ........................................... means, in relation to the Class B2 Notes, all amounts charged off against the Stated Amount of the Class B2 Notes.
Class B2 Note ....................................................... see heading "Summary—Summary of the Notes".
Class of Subordinated Notes ............................... means, in relation to a Class of Notes, each Class of Notes which ranks below the Highest Class of Notes Outstanding.
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Closing Date ......................................................... means 16 July 2014 or such other date as is agreed between the Manager and the Issuer Trustee.
Collections ............................................................ see heading "Description of the Cashflows of the Trust—Determination of the Available Income Amount".
Collection Period ................................................. see heading "Description of the Cashflows of the Trust—Key Dates and Periods".
Combined Bank Account .................................... see heading "Description of the Assets of the Trust—Other Assets of the Trust—Combined Bank Account".
Consumer Credit Code ....................................... means the Consumer Credit Code set out in the Appendix to the Consumer Credit (Queensland) Act 1994 as in force or applied as a law of any Australian jurisdiction.
Corporations Act ................................................. means the Corporations Act 2001 (Cth).
Defaulted Amount ............................................... in relation to a Collection Period means the aggregate principal amount of any housing loans which have been written off by the Manager as uncollectible during that Collection Period.
Determination Date ............................................. means five Business Days before each Monthly Payment Date or, if any such day is not a Business Day, the following Business Day.
Eligible Mortgage Loan ...................................... see heading "Description of the Assets of the Trust—Eligible Mortgage Loan".
Excluded Swap Termination Amount ............... means in relation to the Interest Rate Swap Master Agreement, an amount equal to the amount of any termination payment due and payable:
(a) to the Interest Rate Swap Provider as a result of an Interest Rate Swap Provider Default with respect to such Interest Rate Swap Provider;
(b) to the Interest Rate Swap Provider following an Interest Rate Swap Provider Downgrade Event with respect to such Interest Rate Swap Provider; or
(c) to the Interest Rate Swap Provider where the termination payment arises as a result of a transaction being terminated due to the prepayment of any related housing loan and there are insufficient break costs or early termination amounts (without double counting) recovered from the relevant borrower to pay such termination payment.
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Extraordinary Resolution ................................... in relation to Voting Secured Creditors or a class of Voting Secured Creditors, means:
a resolution which is passed at a meeting of Voting Secured Creditors duly convened and held in accordance with the provisions of the security trust deed by a majority consisting of not less than 75% of the votes of the persons present and voting at the meeting who are Voting Secured Creditors or representing Secured Creditors or, if a poll is demanded, by Voting Secured Creditors holding or representing between them Voting Entitlements comprising in aggregate a number of votes which is not less than 75% of the aggregate number of votes comprised in the Voting Entitlements held or represented by all the persons present at the meeting voting on such poll; or
a written resolution signed by all the Voting Secured Creditors or the class of Voting Secured Creditors (as the case may be).
Fees and Expenses ............................................... see heading "Description of the Transaction Documents and Parties—The Trust Deed and the Management Deed—Issuer Trustee Fees and Expenses".
Finance Charge Collections ................................ see heading "Description of the Cashflows of the Trust—Determination of the Available Income Amount".
Fitch or Fitch Ratings .......................................... means Fitch Australia Pty Ltd.
Further Advance .................................................. means, in relation to a housing loan which is an asset of the Trust, a further advance (whether made before or after the acquisition of the housing loan by the Trust) by the Issuer Trustee under the terms of the housing loan to the extent to which it will cause the scheduled balance of that housing loan, determined prior to any variation to the terms of the housing loan which increases the scheduled balance, to be exceeded.
Granted PPS Security Interest ........................... see heading "Description of the Transaction Documents and Parties —The Security Trust Deed—General".
Gross Liquidity Shortfall .................................... see heading "Description of the Cashflows of the Trust—Liquidity Reserve".
GST legislation ..................................................... The "GST law" as defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Highest Class of Note Outstanding .................... means, on any date, the then highest ranking Class of Notes which remains outstanding (determined by
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reference to the order of priority of payments on enforcement as set out in the Security Trust Deed).
Initial Invested Amount ...................................... means, in relation to each Class A Note, Class A-R Note, Class B1 Note, Class B1-R Note and Class B2 Note, A$10,000.
Initial Note ............................................................ means a Class A Note, a Class B1 Note and/or a Class B2 Note.
Insolvency Event .................................................. in relation to a body corporate means any of the following events:
an order is made that the body corporate be wound up;
a liquidator, provisional liquidator, controller (as defined in the Corporations Act) or administrator is appointed in respect of the body corporate or a substantial portion of its assets whether or not under an order;
except to reconstruct or amalgamate on terms reasonably approved by the Security Trustee, or in the case of a reconstruction or amalgamation of the Security Trustee, on terms reasonably approved by the Manager, the body corporate enters into, or resolves to enter into, a scheme of arrangement, deed of company arrangement or composition with, or assignment for the benefit of, all or any class of its creditors;
the body corporate resolves to wind itself up, or otherwise dissolve itself, or gives notice of its intention to do so, except to reconstruct or amalgamate on terms reasonably approved by the Security Trustee, or in the case of a reconstruction or amalgamation of the Security Trustee, except on terms reasonably approved by the Manager, or is otherwise wound up or dissolved;
the body corporate is or states that it is insolvent;
as a result of the operation of section 459F(1) of the Corporations Act, the body corporate is taken to have failed to comply with a statutory demand;
the body corporate takes any step to obtain protection or is granted protection from its creditors, under any applicable legislation;
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any writ of execution, attachment, distress or similar process is made, levied or issued against or in relation to a substantial portion of the body corporate’s assets and is not satisfied or withdrawn or contested in good faith by the body corporate within 21 days; or
anything analogous or having a substantially similar effect to any of the events specified above happens under the law of any applicable jurisdiction.
Interest Rate Swap .............................................. means each interest rate swap transaction entered into on or about the date of the Sub-Fund Notice in relation to the Trust, as evidenced by a confirmation that supplements, forms part of and is subject to, the Interest Rate Swap Master Agreement.
Interest Rate Swap Agreement means the Interest Rate Swap Master Agreement, together with the confirmations thereunder evidencing any Interest Rate Swap in relation to the Trust.
Interest Rate Swap Master Agreement ............. means a Swap Master Agreement entered into on 3 February 2005 between the Issuer Trustee, the Manager and the Interest Rate Swap Provider, governing the Interest Rate Swap and the Basis Swap, as amended and supplemented from time to time or any replacement interest rate swap agreement.
Interest Rate Swap Provider .............................. see heading "Summary—Parties to the Transaction".
Interest Rate Swap Provider Default means, in relation to an Interest Rate Swap Agreement, the occurrence of an Event of Default (as defined in such Interest Rate Swap Agreement) where the relevant Interest Rate Swap Provider is the Defaulting Party (as defined in such Interest Rate Swap Agreement), other than an Interest Rate Swap Provider Downgrade Event.
Invested Amount .................................................. means, in relation to a Note at any given time, the Initial Invested Amount for that Note less the aggregate amounts of payments previously made on account of principal to the Noteholders of that Note.
ITAA 1936 ............................................................ means the Income Tax Assessment Act 1936.
Joint Lead Managers ........................................... means Macquarie Bank Limited, National Australia Bank Limited, J.P. Morgan Australia Limited and Australia and New Zealand Banking Group Limited.
Liquidity Reserve ................................................ see heading "Description of the Assets of the Trust—Liquidity Reserve".
Liquidity Reserve Draw ...................................... means, in relation to a Determination Date, an amount equal to the lesser of:
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(a) the Gross Liquidity Shortfall in relation to that Determination Date less the Principal Draw in relation to that Determination Date (or zero if there is no Gross Liquidity Shortfall in relation to that Determination Date); and
(b) the Liquidity Reserve as at that Determination Date.
LTV ....................................................................... means, in relation to a housing loan and the relevant mortgaged property, the ratio of the principal amount of that housing loan to the value of the mortgaged property.
Macquarie Group ................................................ means Macquarie Group Limited ABN 94 122 169 279 and each of its related body corporates (within the meaning of the Corporations Act).
Management Deed ............................................... means the Restated Management Deed dated 8 June 1993 entered into between the Issuer Trustee and the Manager (as amended and supplemented).
Manager ............................................................... means Macquarie Securitisation Limited or any replacement Manager appointed as described under the heading "Description of the Transaction Documents and Parties—Powers of Manager".
Margin .................................................................. means, in relation to a Note, the margin in relation to that Note expressed as a percentage per annum as determined by the Manager and notified to the Issuer Trustee in accordance with the Sub-Fund Notice.
Monthly Payment Date ....................................... see heading "Description of the Cashflows of the Trust—Key Dates and Periods".
Monthly Period .................................................... see heading "Description of the Cashflows of the Trust—Key Dates and Periods".
Moody's ................................................................ means Moody's Investors Service Pty Limited.
Mortgage Loan Rights ........................................ see heading "Description of the Notes—Redemption of the Notes—Optional Redemption of all Notes on or after the Call Date".
Mortgagor Break Benefits .................................. means, in relation to a housing loan, any benefits payable to a mortgagor under the terms of that housing loan or as required by law (and to the extent the former is inconsistent with the latter, the latter will prevail) upon, and solely in respect of, the early termination of a given fixed interest rate relating to all or part of that housing loan prior to the scheduled termination of that fixed interest rate.
Mortgagor Break Costs ....................................... means, in relation to a housing loan, any costs payable
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by the mortgagor in respect of that housing loan upon, and solely in respect of, the early termination of a given fixed interest rate relating to all or part of that housing loan prior to the scheduled termination of that fixed interest rate.
National Consumer Credit Legislation .............. means each of:
the NCCP Act;
the National Consumer Credit Protection (Fees) Act 2009 (Cth);
the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth);
the National Consumer Credit Protection Amendment Act 2010 (Cth);
any acts or other legislation enacted in connection with any of the acts set out in the four bullet points above, the NCCP Regulations and any other regulations made under any of the acts set out in the four bullet points above;
Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001, so far as it relates to the obligations in respect of an Australian Credit Licence issued under the NCCP Act or registration as a Registered Person under the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009 (Cth); and
any other Commonwealth, State or Territory legislation that covers conduct relating to credit activities (whether or not it also covers other conduct), but only in so far as it covers conduct relating to credit activities.
National Credit Code .......................................... means the provisions set out in Schedule 1 to the NCCP Act.
NCCP Act ............................................................. means the National Consumer Credit Protection Act 2009 (Cth).
NCCP Regulations ............................................... means the National Consumer Credit Protection Regulations 2010 (Cth).
Net Collections ..................................................... means, in relation to a Collection Period, the Collections for that Collection Period less the Principal Draw (if any) in relation to the
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Determination Date immediately following the end of that Collection Period.
Net Income ........................................................... has the meaning given to that term under the heading "Description of the Cashflows of the Trust—Auditing of Accounts and Net Income".
Note ....................................................................... means a Class A Note, a Class A-R Note, a Class B1 Note, a Class B1-R Note or a Class B2 Note, see heading "Summary—Summary of the Notes".
Noteholder ............................................................ means the holder of a Class A Note, Class A-R Note, Class B1 Note, Class B1-R Note or Class B2 Note, or, as the context requires, any person holding the beneficial interest in the relevant Note.
Note Transfer and Acceptance ........................... see heading "Description of the Notes—Form of the Notes and the Register—Transfer of Notes".
Offered Note ......................................................... means a Class A Note.
Offshore Associate ............................................... means an associate (as defined in section 128F(9) of the ITAA 1936) of an entity that is either:
(a) a non-resident of Australia that does not acquire the Notes or an interest in the Notes in carrying on a business in Australia at or through a permanent establishment of the associate in Australia; or
(b) a resident of Australia that acquires the Notes or an interest in the Notes in carrying on a business in a country outside Australia at or through a permanent establishment of the associate in that country.
Originator ............................................................. see heading "PUMA Residential Loan Program—Origination and Management of Housing Loans—Originators".
Prepayment Amount ........................................... means any amount paid, or assets lodged by, the Manager or any other party to a Transaction Document to or with the Issuer Trustee as:
a prepayment of any obligation by that person to the Issuer Trustee under a Transaction Document to the extent that such amount has not, except as a prepayment, become payable to the Issuer Trustee in accordance with that Transaction Document; or
collateral for any obligation by that person to the Issuer Trustee under a Transaction Document to the extent that such amount has not been utilised by the Issuer Trustee in
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accordance with that Transaction Document,
and includes any amount or any assets specified in a Transaction Document to be a Prepayment Amount.
Prescribed Period ................................................ means in relation to a housing loan the period of 120 days (including the last day of that period) commencing on the date that the housing loan was acquired by the Issuer Trustee as trustee of the Trust or such greater period as may be agreed between the Manager and the Australian Prudential Regulation Authority.
Pricing Date .......................................................... 3 July 2014.
Principal Collections ........................................... in relation to a Collection Period means the amount which is either:
zero, where the Finance Charge Collections for that Collection Period exceed the Net Collections for that Collection Period; or
in all other cases, the Net Collections for that Collection Period less the Finance Charge Collections for that Collection Period.
Principal Draw ..................................................... in relation to a Determination Date means an amount equal to the lesser of:
the Gross Liquidity Shortfall in relation to that Determination Date (or zero if there is no Gross Liquidity Shortfall in relation to that Determination Date); and
where the Collections for the Collection Period just ended exceed the Finance Charge Collections for that Collection Period, the amount of such excess or, where the Finance Charge Collections for the Collection Period just ended exceed the Collections for that Collection Period, zero.
Prior Interest ........................................................ means the lien over, and right of indemnification from, the assets of the Trust held by the Issuer Trustee under, and calculated in accordance with, the Trust Deed for Fees and Expenses payable to the Issuer Trustee, other than the Secured Moneys, which are unpaid, or paid by the Issuer Trustee but not reimbursed to the Issuer Trustee from the assets of the Trust.
PUMA Program ................................................... means the warehouse trusts and other sub-funds constituted under the Trust Deed.
PUMA Parameters .............................................. means the parameters established by the Manager from time to time, or under the Trust Deed, in relation to the origination and management of housing loans in the
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PUMA Program.
Recoveries ............................................................. means, in relation to a housing loan, all amounts recovered in respect of the principal of that housing loan that was part (or the whole) of a Defaulted Amount.
Redraws ................................................................ means, in relation to a housing loan which is an asset of the Trust, a further advance, or that part of a further advance, by the Issuer Trustee under the terms of the housing loan which does not cause the scheduled balance, determined prior to any variation to the terms of the housing loan which increases the scheduled balance, of that housing loan to be exceeded.
Redraw Facility Interest ..................................... means, in relation to a Monthly Payment Date or a date upon which a distribution is made to the redraw facility provider under the security trust deed, the fees and interest due on that Monthly Payment Date or date, as the case may be, and any fees and interest unpaid from prior Payment Dates, and interest on them, outstanding pursuant to the terms of the redraw facility agreement.
Refinancing Closing Date.................................... means either the Class A Note Refinancing Closing Date or the Class B1 Note Refinancing Closing Date.
Refinancing Notes ................................................ means the Class A-R Notes and/or the Class B1-R Notes.
Related Entity ...................................................... A related entity as defined in Section 9 of the Corporations Act.
Retail Client ......................................................... has the meaning given to that term in section 761G of the Corporations Act.
Required Extraordinary Expenses Reserve .... means, in relation to any date, A$150,000 or such other amount notified in writing by the Manager to the Issuer Trustee provided that no such amount will be effective for the purpose of this definition unless the Manager has confirmed, after providing notice to each rating agency, that such other amount will not result in a downgrading, withdrawal or qualification of any rating then assigned or, if prior to the Closing Date, which is proposed to be assigned by a rating agency to the Notes.
Required Liquidity Reserve ................................ means, in relation to any date, the greater of:
0.13% of the Total Invested Amount as at the Closing Date; and
1.3% of the outstanding principal balance of all housing loans,
or such other amount notified in writing by the
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Manager to the Issuer Trustee provided that no such amount will be effective for the purpose of this definition unless the Manager has confirmed, after providing notice to each rating agency, that such other amount will not result in a downgrading, withdrawal or qualification of any rating then assigned or, if prior to the Closing Date, which is proposed to be assigned by a rating agency to the Notes.
Scheduled Maturity Date .................................... means (in relation to the Class A Notes and the Class B1 Notes only) the Monthly Payment Date falling in July 2019.
Secured Creditors ................................................ see heading "Description of the Transaction Documents and Parties —The Security Trust Deed—General".
Secured Moneys ................................................... means, without double counting, the aggregate of all moneys owing to the Security Trustee or to a Secured Creditor under any of the Transaction Documents.
Security ................................................................. see heading "Description of the Transaction Documents and Parties —The Security Trust Deed—General".
Security Enhancement ........................................ means any mortgage insurance policy, any certification, representation, warranty or indemnity provided by any person, including any certification by the Manager, and/or such other security, support, rights and /or benefits made available to the Issuer Trustee in support or substitution for an Authorised Investment or income or benefit relating to an Authorised Investment as permitted by the Trust Deed.
Security Trustee ................................................... means Perpetual Trustee Company Limited or any replacement Security Trustee appointed as described at heading "Description of the Transaction Documents and Parties—The Security Trust Deed —Voluntary Retirement of the Security Trustee".
Senior Further Advance...................................... see heading "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances".
Senior Redraw Facility Interest Amount . means, in relation to a Monthly Payment Date or a date upon which a distribution is made to the redraw facility provider under the security trust deed, an amount determined by the following calculation:
RFISRFIA
RP
SRP
where:
SRFIA = the Senior Redraw Facility Interest Amount;
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SRP = the Senior Redraw Facility Principal on that Monthly Payment Date or date;
RP = the principal outstanding under the redraw facility on that Monthly Payment Date or date; and
RFI = the Redraw Facility Interest on that Monthly Payment Date or date.
Senior Redraw Facility Principal ..................... means, in relation to a Monthly Payment Date or a date upon which a distribution is made to the redraw facility provider under the security trust deed, the amount, if any, by which the principal outstanding under the redraw facility in relation to that Monthly Payment Date or date exceeds the aggregate Subordinate Further Advance Amounts in respect of the housing loans, which are, or were, assets of the Trust, in relation to that Monthly Payment Date or date.
Standard & Poor’s or S&P ............................... means Standard & Poor’s (Australia) Pty Limited.
Stated Amount ................................................... means:
(a) at any given time which is not on a Determination Date in relation to a Note or Class of Notes, the aggregate Initial Invested Amount for that Note or Class of Notes less the aggregate of:
(i) the aggregate amount of payments (if any) previously made on account of principal to the Noteholder(s) of that Note or Class of Notes; and
(ii) the aggregate amount of Charge-Offs in respect of that Note or Class of Notes made on prior Monthly Payment Dates and remaining unreimbursed; and
(b) on a Determination Date in relation to a Note or Class of Notes, the amount calculated below:
CBASA
where:
SA = the Stated Amount of that Note or Class of Notes on that Determination Date;
A = the amount calculated pursuant to paragraph (a) in respect of that Note or Class of Notes (without having regard to
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the condition in paragraph (a) that such amount be calculated on a day other than a Determination Date);
B = the amount determined by the Manager on that Determination Date to be allocated from the Available Income Amount in accordance with the Sub-Fund Notice on the next following Monthly Payment Date to reimburse any unreimbursed Charge-Offs in respect of that Note or Class of Notes; and
C = the amount determined by the Manager on that Determination Date to be charged-off in respect of that Note or Class of Notes in accordance with the Sub-Fund Notice on the next following Monthly Payment Date.
Subordinate Further Advance .......................... see heading "Description of the Assets of the Trust—Redraws, Senior Further Advances and Subordinate Further Advances".
Subordinate Further Advance Amount ........... means, in relation to a Monthly Payment Date or a date upon which a distribution is made to the redraw facility provider under the security trust deed and a housing loan, the amount, if any, by which on the Determination Date, or the earlier of the date of that distribution or date of sale of the relevant housing loan, as the case may be, the principal balance outstanding of that housing loan exceeds the scheduled balance of that housing loan as a result of Subordinate Further Advances made before the acquisition of the housing loan or by the Issuer Trustee pursuant to the terms of the Sub-Fund Notice on the basis that repayments of principal on that housing loan by a borrower are applied first towards any scheduled principal payments on that housing loan and then towards those Subordinate Further Advances (but not as a result of capitalised interest in respect of those Subordinate Further Advances). If a housing loan is written off by the Manager as unrecoverable in the Monthly Period then:
(a) subject to the following, the Subordinate Further Advance Amount in relation to that housing loan will be the Subordinate Further Advance Amount, as determined in accordance with the above paragraph, immediately before the housing loan was written off as unrecoverable;
(b) if there is no Defaulted Amount in relation to that Monthly Period, the Subordinate Further
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Advance Amount in relation to that housing loan will be reduced to zero on the Monthly Payment Date at the end of that Monthly Period; and
(c) if there is a Defaulted Amount in relation to that Monthly Period, the Subordinate Further Advance Amount in relation to that housing loan on and from the Monthly Payment Date at the end of that Monthly Period will, subject to the following, be the lesser of the amount referred to in paragraph (a) above and that Defaulted Amount. The Subordinate Further Advance Amount in relation to that housing loan will be reduced to zero at the end of the next Monthly Payment Date on or after that Monthly Payment Date upon which the Defaulted Amount and any Charge-Offs have been reimbursed.
Support Facility ................................................. means each interest rate swap agreement, guaranteed investment contract (if any), Security Enhancement and standby arrangement (including the redraw facility) entered into by or transferred to the Issuer Trustee, or which the Issuer Trustee has the benefit of, as trustee of that Trust and includes any other agreement or instrument which is specified by the Issuer Trustee and the Manager to be a Support Facility in relation to the Trust.
Threshold Rate .................................................. see heading "Summary—Summary of the Notes".
Total Expenses ................................................... in relation to a Collection Period means the aggregate of the amounts referred to in paragraphs (a) to (f) (inclusive) under the heading "Description of the Cashflows of the Trust—Distribution of the Available Income Amount".
Total Invested Amount ..................................... means, at any time, the aggregate of the Invested Amounts at that time of all Notes.
Transaction Documents .................................... see heading "Transaction Documents available for Inspection".
Trust ................................................................... means the trust known as PUMA Series 2014-2 established under the Trust Deed.
Trust Deed .......................................................... means the trust deed dated 13 July 1990 between the Issuer Trustee and the person referred to therein as the Founder (as amended and supplemented).
Unreimbursed Principal Draw ......................... in relation to a Determination Date, means the aggregate amount of all Principal Draws in relation to prior Determination Dates less the aggregate of all amounts allocated to the Available Principal Amount
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on prior Monthly Payment Dates.
Voting Entitlements ........................................... means, on a particular date the number of votes which a Secured Creditor would be entitled to exercise if a meeting of Secured Creditors were held on that date, being in respect of a given Secured Creditor, the number calculated by dividing the Secured Moneys owing to that Secured Creditor by 10 and rounding the resultant figure down to the nearest whole number.
Voting Secured Creditors ................................. (a) if any Class A Notes or any Class A-R Notes then remain outstanding:
(i) the Noteholders in respect of the outstanding Class A Notes (if any) and the Class A-R Notes (if any); and
(ii) the Interest Rate Swap Provider;
(b) if no Class A Notes or Class A-R Notes remain outstanding, the Class B1 Noteholders (if any) and the Class B1-R Noteholders (if any) and the Interest Rate Swap Provider;
(c) if no Class A Notes, Class A-R Notes, Class B1 Notes or Class B1-R Notes remain outstanding, the Class B2 Noteholders and the Interest Rate Swap Provider; and
(d) if no Class A Notes, Class A-R Notes, Class B1 Notes, Class B1-R Notes or Class B2 Notes remain outstanding, the Interest Rate Swap Provider and any other provider of a Support Facility.
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ANNEXURE 1 – DETAILS OF THE HOUSING LOAN POOL
The following tables summarise the housing loan pool as at 27 May 2014. Further information regarding the housing loans and the PUMA residential loan program is contained under the heading "PUMA Residential Loan Program".
PUMA Series 2014-2 as at 27 May 2014 Number of Housing Loan Accounts 4,575 Number of Housing Loans 3,346 Housing Loan Pool Size $986,898,263 Average Current Housing Loan Balance $294,949 Maximum Current Housing Loan Balance $1,000,000 Minimum Current Housing Loan Balance $4,937 Total Valuation of the Properties $1,716,525,331 Maximum Remaining Term to Maturity (Months) 358 Weighted Average Remaining Term to Maturity (Months) 342 Weighted Average Seasoning (Months) 18 Maximum Current LVR 92.00% Weighted Average Current LVR 65.91% Proportion of Interest Only Loans 24.98% Proportion of Investment / Non Owner-Occupied Loans 24.98% Proportion of Verified Income Loans 100.00%
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Pool profile by year and period of origination
Year and Period of Origination
No. of Housing Loans
Total Security Valuation (A$)
Total Current Loan Balance (A$)
Weighted Average Current LTV (%)
Average Current Loan Balance (A$)
% by Current Loan Balance
2004 Q1 40 $18,426,000 $7,598,666 56.34% $189,967 0.77%
2004 Q2 20 $9,162,000 $3,715,775 52.39% $185,789 0.38%
2004 Q3 2 $605,000 $497,195 82.18% $248,598 0.05%
2004 Q4 3 $1,536,500 $484,908 36.16% $161,636 0.05%
2005 Q1 1 $850,000 $453,351 53.34% $453,351 0.05%
2005 Q2 1 $660,000 $352,057 53.34% $352,057 0.04%
2005 Q3 3 $1,580,000 $1,029,568 65.98% $343,189 0.10%
2005 Q4 4 $1,965,000 $770,239 44.31% $192,560 0.08%
2006 Q1 4 $1,505,000 $1,091,151 73.07% $272,788 0.11%
2006 Q2 5 $2,290,000 $1,177,370 52.18% $235,474 0.12%
2006 Q3 2 $823,048 $681,419 82.81% $340,709 0.07%
2006 Q4 7 $3,285,000 $2,373,685 76.47% $339,098 0.24%
2007 Q1 2 $843,000 $649,235 79.17% $324,617 0.07%
2007 Q2 8 $3,442,350 $2,576,692 77.12% $322,087 0.26%
2007 Q3 2 $1,150,000 $878,086 76.55% $439,043 0.09%
2007 Q4 8 $3,999,000 $2,999,897 82.45% $374,987 0.30%
2008 Q1 1 $520,000 $404,250 77.74% $404,250 0.04%
2008 Q2 4 $1,660,000 $901,855 72.25% $225,464 0.09%
2008 Q3 4 $1,995,000 $1,527,512 82.31% $381,878 0.15%
2008 Q4 1 $350,000 $94,393 26.97% $94,393 0.01%
2009 Q1 - $0 $0 0.00% $0 0.00%
2009 Q2 2 $1,335,000 $458,552 34.38% $229,276 0.05%
2009 Q3 1 $320,000 $187,680 58.65% $187,680 0.02%
2009 Q4 1 $750,000 $93,310 12.44% $93,310 0.01%
2010 Q1 - $0 $0 0.00% $0 0.00%
2010 Q2 4 $2,995,000 $1,565,535 58.41% $391,384 0.16%
2010 Q3 6 $3,460,000 $2,190,739 66.75% $365,123 0.22%
2010 Q4 4 $2,035,000 $1,275,474 66.87% $318,868 0.13%
2011 Q1 20 $10,710,000 $5,693,992 65.89% $284,700 0.58%
2011 Q2 37 $16,495,000 $8,629,909 61.51% $233,241 0.87%
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2011 Q3 100 $46,370,450 $25,816,007 64.26% $258,160 2.62%
2011 Q4 123 $56,010,250 $30,477,589 65.61% $247,785 3.09%
2012 Q1 215 $97,263,500 $58,813,746 68.02% $273,552 5.96%
2012 Q2 314 $149,739,410 $83,590,629 64.94% $266,212 8.47%
2012 Q3 399 $193,617,122 $110,688,608 66.27% $277,415 11.22%
2012 Q4 305 $140,346,850 $86,644,516 69.45% $284,080 8.78%
2013 Q1 172 $86,505,561 $48,880,908 63.85% $284,191 4.95%
2013 Q2 228 $112,205,000 $66,991,469 66.98% $293,822 6.79%
2013 Q3 348 $187,317,905 $108,777,996 66.37% $312,580 11.02%
2013 Q4 455 $261,852,235 $149,404,312 64.68% $328,361 15.14%
2014 Q1 490 $290,550,150 $166,459,993 65.24% $339,714 16.87%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by region
Region No. of Housing Loans Total Security Valuation
(A$) Total Current Loan
Balance (A$)
Weighted Average
Current LTV (%)
Average Current Loan Balance
(A$)
% by Current Loan Balance
Australian Capital Territory
Inner City - $0 $0 0.00% $0 0.00%
Other Metro 114 $60,419,950 $31,972,756 64.00% $280,463 3.24%
Non Metro - $0 $0 0.00% $0 0.00%
Australian Capital Territory Total
114 $60,419,950 $31,972,756 64.00% $280,463 3.24%
New South Wales
Inner City 4 $2,770,000 $1,000,163 39.01% $250,041 0.10%
Other Metro 801 $524,090,512 $283,204,853 63.52% $353,564 28.70%
Non Metro 352 $151,413,987 $92,295,220 68.46% $262,202 9.35%
New South Wales Total 1,157 $678,274,499 $376,500,236 64.67% $325,411 38.15%
Queensland
Inner City 5 $2,895,000 $1,498,179 65.65% $299,636 0.15%
Other Metro 317 $152,672,850 $91,000,668 67.49% $287,068 9.22%
Non Metro 307 $134,560,826 $83,820,400 69.56% $273,031 8.49%
Queensland Total 629 $290,128,676 $176,319,247 68.46% $280,317 17.87%
Victoria
Inner City 10 $5,817,500 $2,954,128 63.85% $295,413 0.30%
Other Metro 746 $372,718,156 $215,109,102 64.86% $288,350 21.80%
Non Metro 182 $63,883,200 $38,680,355 68.89% $212,529 3.92%
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Victoria Total 938 $442,418,856 $256,743,586 65.46% $273,714 26.02%
Western Australia
Inner City 4 $3,000,000 $1,388,704 57.75% $347,176 0.14%
Other Metro 223 $129,062,900 $74,283,118 66.30% $333,108 7.53%
Non Metro 26 $11,267,000 $7,670,824 69.93% $295,032 0.78%
Western Australia Total 253 $143,329,900 $83,342,645 66.49% $329,418 8.44%
South Australia
Inner City 3 $1,225,000 $587,009 65.15% $195,670 0.06%
Other Metro 154 $63,147,950 $38,018,791 66.75% $246,875 3.85%
Non Metro 14 $4,861,500 $3,193,850 71.43% $228,132 0.32%
South Australia Total 171 $69,234,450 $41,799,650 67.09% $244,442 4.24%
Northern Territory
Inner City - $0 $0 0.00% $0 0.00%
Other Metro 12 $6,870,000 $4,093,302 68.86% $341,109 0.41%
Non Metro 5 $3,025,000 $1,650,861 62.19% $330,172 0.17%
Northern Territory Total 17 $9,895,000 $5,744,164 66.94% $337,892 0.58%
Tasmania
Inner City 1 $570,000 $221,724 38.90% $221,724 0.02%
Other Metro 34 $12,535,500 $7,967,054 73.44% $234,325 0.81%
Non Metro 32 $9,718,500 $6,287,201 71.44% $196,475 0.64%
Tasmania Total 67 $22,824,000 $14,475,980 72.04% $216,059 1.47%
Inner City Sub-Total 27 $16,277,500 $7,649,906 59.22% $283,330 0.78%
Other Metro Sub-Total 2,401 $1,321,517,818 $745,649,645 64.99% $310,558 75.55%
Non Metro Sub-Total 918 $378,730,013 $233,598,712 69.05% $254,465 23.67%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
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Pool profile by current outstanding balance
Current Balance Outstanding (A$)
No. of Housing Loans
Total Security Valuation (A$)
Total Current Loan Balance
(A$)
Weighted Average Current
LTV (%)
Average Current
Loan Balance (A$)
% by Current
Loan Balance
0 to 50,000 75 $39,654,000 $2,135,698 8.61% $28,476 0.22%
50,001 to 100,000 131 $60,504,750 $10,386,428 24.32% $79,286 1.05%
100,001 to 150,000 294 $114,422,200 $38,466,364 42.57% $130,838 3.90%
150,001 to 200,000 458 $173,161,150 $81,150,299 54.31% $177,184 8.22%
200,001 to 250,000 499 $203,974,250 $112,139,097 61.12% $224,728 11.36%
250,001 to 300,000 505 $223,629,380 $138,556,994 66.65% $274,370 14.04%
300,001 to 350,000 413 $204,437,182 $134,526,481 70.02% $325,730 13.63%
350,001 to 400,000 296 $164,070,799 $110,723,534 71.44% $374,066 11.22%
400,001 to 450,000 220 $137,594,798 $93,238,586 70.90% $423,812 9.45%
450,001 to 500,000 134 $97,560,450 $63,553,192 69.63% $474,278 6.44%
500,001 to 550,000 99 $78,324,800 $51,824,304 69.11% $523,478 5.25%
550,001 to 600,000 75 $63,209,200 $43,114,967 70.92% $574,866 4.37%
600,001 to 650,000 42 $39,422,500 $26,093,761 68.88% $621,280 2.64%
650,001 to 700,000 30 $29,576,500 $20,325,239 71.55% $677,508 2.06%
700,001 to 750,000 24 $25,500,372 $17,363,917 72.95% $723,497 1.76%
750,001 to 800,000 16 $17,580,000 $12,388,973 71.82% $774,311 1.26%
800,001 to 850,000 10 $12,625,000 $8,239,089 67.11% $823,909 0.83%
850,001 to 900,000 15 $18,280,000 $13,160,931 73.73% $877,395 1.33%
900,001 to 950,000 6 $7,563,000 $5,569,838 73.92% $928,306 0.56%
950,001 to 1,000,000 4 $5,435,000 $3,940,574 73.41% $985,144 0.40%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by current LTV
Current LTV (%) No. of Housing Loans Total Security Valuation (A$)
Total Current Loan Balance
(A$)
Weighted Average Current LTV (%)
Average Current Loan Balance (A$)
% by Current Loan Balance
0 - 10.00 82 $54,586,000 $3,198,217 7.16% $39,003 0.32%
10.01 - 15.00 45 $27,604,750 $3,455,205 12.68% $76,782 0.35%
15.01 - 20.00 65 $42,878,000 $7,505,450 17.64% $115,468 0.76%
20.01 - 25.00 73 $43,524,500 $9,729,092 22.44% $133,275 0.99%
25.01 - 30.00 114 $75,796,000 $20,938,670 27.70% $183,673 2.12%
30.01 - 35.00 104 $64,628,500 $20,961,834 32.50% $201,556 2.12%
35.01 - 40.00 132 $84,756,200 $31,727,116 37.49% $240,357 3.21%
40.01 - 45.00 158 $86,185,450 $36,812,542 42.76% $232,991 3.73%
45.01 - 50.00 162 $85,858,423 $40,898,183 47.68% $252,458 4.14%
50.01 - 55.00 217 $119,123,250 $62,687,840 52.67% $288,884 6.35%
55.01 - 60.00 264 $136,811,500 $78,814,523 57.64% $298,540 7.99%
60.01 - 65.00 282 $151,091,500 $94,656,665 62.68% $335,662 9.59%
65.01 - 70.00 259 $127,028,750 $85,814,868 67.59% $331,332 8.70%
70.01 - 75.00 272 $133,592,630 $97,149,261 72.75% $357,166 9.84%
75.01 - 80.00 631 $289,812,560 $225,977,471 78.00% $358,126 22.90%
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80.01 - 85.00 197 $78,779,498 $65,229,834 82.83% $331,116 6.61%
85.01 - 90.00 236 $93,512,159 $82,303,335 88.04% $348,743 8.34%
90.01 - 95.00 53 $20,955,661 $19,038,158 90.85% $359,211 1.93%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by year of maturity
Year of Maturity No. of Housing
Loans Total Security Valuation (A$)
Total Current Loan Balance (A$)
Weighted Average Current
LTV (%)
Average Current Loan Balance (A$)
% by Current Loan
Balance
2034 64 $28,929,500 $12,094,840 55.90% $188,982 1.23%
2035 9 $5,215,000 $2,541,831 54.73% $282,426 0.26%
2036 18 $8,223,048 $5,373,966 69.90% $298,554 0.54%
2037 19 $9,204,350 $7,177,940 79.45% $377,786 0.73%
2038 12 $5,075,000 $3,068,725 76.14% $255,727 0.31%
2039 4 $2,405,000 $739,541 37.77% $184,885 0.07%
2040 12 $7,435,000 $4,244,940 62.03% $353,745 0.43%
2041 230 $108,335,950 $58,020,112 64.23% $252,261 5.88%
2042 1,238 $577,536,632 $338,060,096 67.05% $273,070 34.25%
2043 1,084 $576,580,421 $333,906,446 65.84% $308,032 33.83%
2044 656 $387,585,430 $221,669,826 64.87% $337,911 22.46%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by months remaining to maturity
Range of Months Remaining to Maturity
No. of Housing Loans
Total Security Valuation (A$)
Total Current Loan Balance
(A$)
Weighted Average
Current LTV (%)
Average Current Loan Balance (A$)
% by Current Loan Balance
229 - 240 54 $25,143,000 $10,213,737 54.38% $189,143 1.03%
241 - 252 12 $5,436,500 $2,536,157 59.12% $211,346 0.26%
253 - 264 16 $7,500,000 $4,151,823 59.63% $259,489 0.42%
265 - 276 18 $7,865,898 $5,759,897 76.45% $319,994 0.58%
277 - 288 16 $7,946,500 $5,964,226 79.35% $372,764 0.60%
289 - 300 6 $2,755,000 $1,631,462 78.64% $271,910 0.17%
301 - 312 6 $3,830,000 $1,699,577 54.49% $283,263 0.17%
313 - 324 57 $29,549,000 $16,164,443 64.25% $283,587 1.64%
325 - 336 619 $281,435,737 $160,537,574 65.94% $259,350 16.27%
337 - 348 1,159 $561,092,906 $326,642,216 66.53% $281,831 33.10%
349 - 361 1,383 $783,970,790 $451,597,152 65.54% $326,534 45.76%
362+ - $0 $0 0.00% $0 0.00%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
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Pool profile by property ownership type
Property Ownership Type
No. of Housing Loans
Total Security Valuation (A$)
Total Current Loan Balance (A$)
Weighted Average Current
LTV (%)
Average Current Loan Balance
(A$)
% by Current Loan Balance
Investment 827 $418,009,014 $246,569,221 67.08% $298,149 24.98%
Owner Occupied 2,519 $1,298,516,317 $740,329,043 65.52% $293,898 75.02%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool Profile by Property Type – Inner City
Property Type No. of Housing
Loans Total Security Valuation (A$)
Total Current Loan Balance (A$)
Weighted Average Current
LTV (%)
Average Current Loan Balance
(A$)
% by Current Loan Balance
Detached or Semi-Detached 5 $3,477,500 $1,322,559 46.76% $264,512 0.13%
Unit or Apartment 22 $12,800,000 $6,327,347 61.83% $287,607 0.64%
Townhouse, Villa or Duplex - $0 $0 0.00% $0 0.00%
Total 27 $16,277,500 $7,649,906 59.22% $283,330 0.78%
Pool Profile by Property Type
Property Type No. of Housing
Loans Total Security Valuation (A$)
Total Current Loan Balance
(A$)
Weighted Average
Current LTV (%)
Average Current Loan Balance (A$)
% by Current Loan Balance
Detached or Semi-Detached 2,586 $1,354,524,623 $776,520,340 65.85% $300,279 78.68%
Unit or Apartment 653 $308,913,585 $180,672,607 66.22% $276,681 18.31%
Townhouse, Villa or Duplex 107 $53,087,123 $29,705,316 65.38% $277,620 3.01%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by arrears
Delinquency No. of Housing Loans Percentage of Pool by
Number
Outstanding Balance of the Applicable Non Delinquent Housing
Loans
Percentage of Pool by Outstanding Balance of
Housing Loans
Not in Arrears 3,346 100.00% $986,898,263 100.00%
Total 3,346 100.00% $986,898,263 100.00%
Pool profile by mortgage insurer
Mortgage Insurer No. of Housing
Loans Total Security Valuation (A$)
Total Current Loan Balance
(A$)
Weighted Average Current
LTV (%)
Average Current Loan Balance (A$)
% by Current
Loan Balance
Genworth Financial Mortgage Insurance Pty Ltd
3,294 $1,689,597,831 $974,691,406 65.95% $295,899 98.76%
QBE Lenders' Mortgage Insurance Ltd
52 $26,927,500 $12,206,857 62.15% $234,747 1.24%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
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Pool profile by income verification type
Income verification type No. of Housing
Loans Total Security Valuation (A$)
Total Current Loan Balance (A$)
Weighted Average Current
LTV (%)
Average Current Loan Balance (A$)
% by Current Loan Balance
Verified Income 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Total 3,346 $1,716,525,331 $986,898,263 65.91% $294,949 100.00%
Pool profile by amortisation
Amortization No. of Housing Loan
Accounts Total Loan Account
Balance (A$) Weighted Average Current LTV (%)
Average Loan Account Balance
(A$)
% by Loan Account Balance
Principal and Interest 3,169 $740,365,441 67.43% $233,627 75.02%
0 - 5 yrs Interest Only 1,406 $246,532,823 61.34% $175,343 24.98%
Total 4,575 $986,898,263 65.91% $215,715 100.00%
Pool profile by interest rate type
Interest Rate Type No. of Housing Loan
Accounts Total Loan Account
Balance (A$) Weighted Average Current LTV (%)
Average Loan Account Balance
(A$)
% by Loan Account Balance
Variable Rate 3,748 $771,066,806 64.54% $205,728 78.13%
Fixed Rate Remaining period to end of fixed rate period
1 - 12 months 233 $56,254,122 71.39% $241,434 5.70%
13 - 24 months 391 $102,328,106 70.99% $261,709 10.37%
25 - 36 months 162 $47,710,125 70.18% $294,507 4.83%
37 - 48 months 25 $5,773,031 73.59% $230,921 0.58%
49 - 60 months 16 $3,766,073 59.42% $235,380 0.38%
Total 4,575 $986,898,263 65.91% $215,715 100.00%
Pool profile by current interest rate
Current Interest Rate (%)
No. of Housing Loan Accounts
Total Loan Account Balance (A$)
Weighted Average Current LTV (%)
Average Loan Account Balance
(A$)
% by Loan Account Balance
Mortgages with discretionary variable or discounted discretionary variable interest rates
4.001% - 4.50% 4 $912,621 76.87% $228,155 0.09%
4.501% - 5.00% 1,767 $408,687,387 64.08% $231,289 41.41%
5.001% - 5.50% 1,902 $350,393,525 65.26% $184,224 35.50%
5.501% - 6.00% 65 $10,323,721 59.22% $158,826 1.05%
6.001% - 6.50% 10 $749,553 38.23% $74,955 0.08%
Sub-Total 3,748 $771,066,806 64.54% $205,728 78.13%
Mortgages with fixed interest rates
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4.001% - 4.50% 1 $180,000 47.45% $180,000 0.02%
4.501% - 5.00% 355 $99,316,676 70.24% $279,765 10.06%
5.001% - 5.50% 168 $45,251,508 70.77% $269,354 4.59%
5.501% - 6.00% 282 $67,165,208 71.72% $238,174 6.81%
6.001% - 6.50% 16 $3,010,037 70.18% $188,127 0.30%
6.501% - 7.00% 5 $908,027 67.77% $181,605 0.09%
7.001% - 7.50% - $0 0.00% $0 0.00%
7.501% - 8.00% - $0 0.00% $0 0.00%
Sub-Total 827 $215,831,457 70.78% $260,981 21.87%
Total 4,575 $986,898,263 65.91% $215,715 100.00%
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