Fixed Income Solutions (FIS) is pleased to announce a new investment opportunity with Australian Annuity Funding (AAF). This senior secured note issuance is structured through a bankruptcy-remote Special Purpose Vehicle (SPV), offering exposure to trail book loans across mortgage brokers, financial planners, and property management businesses.
Key highlights of the issuance include:
✅ Senior Secured Class A & B Notes
✅ Fixed-rate returns of [9.5%] p.a. (Class A) & [11.5%] p.a. (Class B)
✅ Strong security structure with subordination and excess spread protection
📅 Books close Monday, 10 February 2025
For full details, please read the transaction summary below. Class B supply is limited and suited for experienced, high-yield investors.
Australian Annuity Funding
Australian Annuity Funding (AAF) is a lending business that specialises in trail book lending. Trail book lending provides a distinctive service to professionals who earn commissions, enabling them to receive payment in advance of the scheduled payment dates set by their clients. AAF’s customers currently include mortgage brokers, financial planners, and property managers where the cash flows are originated from mortgages, rent rolls and insurance policies. Moreover, the leadership group of AAF have an excellent track record of writing these loans from their 75 years of experience in finance lending with their previous business, Australian Business Credit. This is a sector that is largely dominated by private lenders.
Security: The underlying loans are secured by a first ranking General Security Agreement (GSA), a specific Personal Property Securities Register (PPSR) charge over the receivables book, a tripartite agreement with the relevant payer of the commissions, director guarantees from companies being paid the commissions and receiving the loans and the right to lodge a caveat over any real property owned by the directors in the event of a default
Please read the full transaction summary below for details. Class B supply is scarce and should only be considered for experienced, high yield investors.
Australian Annuity Funding Trust 2024-1
Australian Annuity Funding Pty Ltd (AAF) is a commission trail book lending business. The key personnel behind AAF have more than 75 years of combined experience in the sector and have stated they have written more than $1.0bn in loans.
Trail book lending is to mortgage brokers, financial planners, and property management businesses. The lending is against ongoing commission income from mortgages, insurance policies or rent rolls. The attractiveness of this type of lending is that commission trail book funding benefits from being tied to collateral of well-known contracted cashflows.
To fund further growth AAF is seeking to establish bankruptcy remote special purpose vehicle (SPV), the Australian Annuity Funding Trust 2024-1 (Trust). The Trust consist of Class A, Class B, and C Notes. Class A and B Notes are available to investors while Class C Notes will be held by AAF as a ‘first loss’ equity tranche. The Notes are secured against the commissions lending and the trail books.
Figure 1: Australian Annuity Funding Trust 2024-1
| Class | Subordination | Coupon | Maturity |
| Class A | 30.0% | [9.5%] | 3 Years |
| Class B | 10.0% | [11.5%] | 3 Years |
| Class C | Equity first loss | N/A | N/A |
Source: Source: AAF
The A Notes have 30.0% subordination, the B Class Notes have 10.0% subordination. If Class C Notes, to be held by AAF, incur any losses it has provided an undertaking to subscribe for further Class C Notes to ensure the 10.0% subordination test is met. The subordination tests must be met for AAF to be able to continue to sell loans to the Trust.
Please refer to the Issue documentation in the links below the table for further details*.
| Item | Description |
| Issuer | AMAL Trustees Pty Ltd as trustee of the Australian Annuity Funding Trust 2024-1 |
| Security Trustee | AMAL Security Services Pty Limited |
| Servicer and Seller | Australian Annuity Funding Pty Ltd |
| Standby Servicer | AMAL Asset Management Limited |
| Type of the Notes | Multi-class, asset backed, secured, limited recourse, fixed rate debt securities. |
| Classes | Class A Notes, Class B Notes and Class C Notes. |
| Replenishment | The Seller will ensure that it subscribes for sufficient Class C Notes to ensure that the aggregate Amount of the C Notes will not be less than 10.0% of all notes. |
| Maturity Date | 3 years |
| Optional Redemption | All or some of the Notes at $102.0 after 6 months, $101.0 after 12 months years and at $100.0 after 2 years |
| Coupon | Class A Notes: [9.50%] QuarterlyClass B Notes: [11.50%] QuarterlyClass C Notes: Equity |
| Report Undertakings | Quarterly compliance certificates and management report on SPV activitiesLoan Servicer report detailing all loans owned by the Trust. |
| Events of Defaults | Non-payment of any Required Payments not cured within 10 business days.Breach of other representations / covenants / obligations.A Stop Funding Event.Transaction Documents are voided.Judgement against the Seller or the Servicer for an amount exceeding $0.5m.Insolvency Event of the Trustee.Enforcement against assets of the Seller or the Servicer exceeding $0.5m. |