Credit enhancement and liquidity
To provide commercial paper (CP) investors with adequate levels of protection, MTF Securities Limited maintains a minimum loss reserve level determined by Standard & Poors and Moody’s, currently 8.5%. The loss reserve comprises seller hold-backs - amounts held back from the amount paid by MTFS for the purchase of contracts - and a cash advance facility (CAF) for an amount equal to approximately one third of the level of the loss reserve.
The CAF facility is provided by Commonwealth Bank of Australia rated A-1+/P-1. The CAF facility is not cancellable until all outstanding CP is repaid.
Liquidity support, which takes the form of 364 day revolving liquidity facilities, covers 100% of the value of CP outstanding at any time. These facilities are provided by two banks, Commonwealth Bank of Australia and Westpac Banking Corporation both rated A-1+/P-1.
Foreign exchange and interest rate management agreements are entered into with Commonwealth Bank of Australia, Westpac Banking Corporation and ANZ National Bank Limited, all rated A-1+/P-1.