Adelaide Managed Funds has told investors in its Asset Backed Yield Trust that it expects to book impairment charges on loans made to Great Southern investors, to which the trust is exposed.
The trust is invested in a securitisation program that has lent money to investors in managed investment schemes promoted by Great Southern, which entered receivership last week.
A statement from Adelaide Managed Funds to the Australian Securities Exchange (ASX) said the trust is exposed to more than 1,800 loans. The manager said the average size of these loans is less than $46,000, and belong to investors across every state and territory in Australia.
The $23.5 million exposure accounts for more than 12 per cent of the trust’s total investment portfolio.
The loans are secured by woodlots, the manager said, and have full recourse to the borrowers. All the loans are currently managed and serviced by Bendigo and Adelaide Bank.
But while the manager said it expects an impairment to its investment as a result of increased arrears and losses in the loan portfolio, the manager believes this impairment will not be material to its NTA backing.
Furthermore, if an impairment charge did occur, it would not impact on the distributable income earned by the trust in the quarter to June 30, 2009, the manager said.
