Latitude financial services incorporated Moody’s Analytics ABS Suite in 2020, starting with its sales finance and credit card securitisations before rolling out to its other programmes. ASJ discusses the software’s benefits with Oggy Li, Senior Manager, Treasury Operations, and Michael Donohue, Assistant Treasurer, at Latitude in Melbourne.

What was onboarding ABS Suite like? How was the integration?

LI: We had regular catch ups with the Moody’s teams in the US and Australia, and then held workshops to map out the data elements from our source system into ABS [asset-backed securities] tables. We then designed our logic to sell assets into the asset classes in the trust on a daily basis.

On the liability side, we started working on reporting and capturing the different structures and setting up calculations for the trust waterfalls that included different interest and fee calculations. We went live with our credit cards ABS deal in Q4 2020. We maintained a parallel-run process for a few months before we turned off the old system.

What did you gain from switching to ABS Suite?

DONOHUE: We have seen efficiency gains in the way we manage data and turn it into daily and monthly investor reports. We have a lot of data, given we issue credit cards to millions of customers. In the past, accounting and aggregating the data to determine our asset position and collections number was onerous.

LI: Moody’s streamlined this by having a control process to sub-run the summary of the information. We also have the system integrated with our treasury management system. Once things are calculated, we push it to our other systems to settle payments and post into the general ledger.

Previously, all the reporting was based in Excel and was open to human error and operational risk. With ABS Suite, everything is locked in with a set of logic programmed into the back end. It is more reliable.

What customisations did Moody’s make to fit the program into Latitude’s various issuance programmes?

LI: The system itself is quite flexible to customise different kinds of waterfall logic. We have two types of trust for credit cards. One is like a warehouse that supports our daily growth in the asset class. We also have a master trust, like a term deal. The two have very different cash-flow allocation requirements based on the legal documents.

ABS Suite can be customised in a way that models the logic based on the requirements in the legal document for the cash flow. It is all driven by diagrams at the back end that act like flowcharts.

It is quite easy to program to meet the requirements for the cash flow and it is easy to clone from an existing trust.

Does ABS Suite accelerate the pace of issuance?

LI: We get to market much quicker. For some of the recent deals we have closed, we realised just how much faster the turnaround is, particularly when dealing with the rating agencies’ requests for certain information or pool cuts.

We were able to turn around these requests within an hour. Everything is just a click away to generate all charts and certifications to share externally.

DONOHUE: We see a material benefit on the data side, such as collateral information we need to provide to investors and all other parties related to a transaction. The turnaround time for this has materially improved.

Lead times for a transaction and marketing to investors has its own nuances depending on markets. But we have taken out the risk, or the delays, as they relate to the provision of the data.