Coffee Catch-Up Meet Tony Perkins
Read excerpts from our Q&A below:
Hi Tony!
Thanks for joining us for coffee. We hope the Melbourne office is treating you well and we’re delighted to have you here with us.
To kick things off, could you tell us a bit about yourself and share some insights into your current role at IAM?
Sure, and thanks for having me!
I started in banking in the mid-80s, then joined what became UBS in 1986. I worked with UBS in Melbourne, Sydney, London and back to Sydney, predominantly in Debt Capital Markets (DCM) but also a bit in Fixed Income Sales. I was intimately involved in UBS’ initiative in securitisation and asset backed finance. Over my career I also worked for a non-bank lender, as a consultant to non-banks and banks about sourcing funding post GFC, I’ve been a corporate adviser and in another bond trading business held various roles including Head of DCM, Head of Syndicate and Head of Research.
Now here I am at IAM as Head of Structured and Asset Backed Finance and what I’m doing is providing investor opportunities and research related to Asset Backed Securities (ABS) and Residential Mortgage-Backed Securities (RMBS). This area has been central to my career for decades and I love it. Analysing these opportunities requires working out where value is, and working out what the risks are. IAM wants to help its investing clients to understand these opportunities.
In the nineties, you were part of a project with the RBA to develop the rules around ADI RMBS vehicles. Could you highlight some key moments from that project and its impact on the Australian RMBS market and investors?
For a whole host of reasons, we knew the RBA wanted Australian ADIs to securitise, but it was obvious the structural features of the securitisation process in offshore markets didn’t fit the nature of the assets destined to be securitised from Australian ADIs’ balance sheets. We secured a mandate from Bankwest and iterated Bankwest’s needs, RBA prudential needs, Ratings Agency needs and RMBS investor needs. It was time consuming, costly and tortuous. UBS’ angle was simply to originate RMBS.
I never dreamt it would be so complicated. Issues that are all assumed in the daily ADI securitisation process today like assignment, interest offset accounts, document custody, shared security and a multitude other issues, had to be pioneered. Having got through all that with a structure that worked with the parties, UBS then secured mandates with multiple second tier banks, and other ADIs. We also advised some of the major trading banks. We achieved our objective.
Are there any other significant projects or achievements from your career that you’d like to share?
I wasn’t involved in the creation of securitisation in Australia as the bulk of early adopters from the late 1980s were non-banks, but it has been highly gratifying to pioneer securitisation for ADIs and, further, watch the development of securitisation as a very, very mainstream funding tool. I really believe financial receivables, funded through the securitisation process, is the optimal funding technique.
So in Australia, since the 1980s, securitisation has developed from nothing. Securitisation is now absolutely mainstream and evidenced by RMBS and ABS being multi-trillion markets and a funding method of the choice for ADIs and non-banks globally.
I’ve also been involved in the development of other markets including the CPI indexed market of corporate bond issues into the domestic capital markets for smaller corporates.
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Now, let’s dive into the professional side of things.
What are some misconceptions you’ve encountered in the industry and how do you address them?
Post-GFC, people thought that the securitisation process was some form of voodoo. Post-GFC I was providing education to investors to make them understand that the securitisation technique is incredibly robust and the investment risks are completely predictable, but in the sub-prime crisis in the United States, what happened was it was rubbish assets into the securitisation process, and rubbish ABS/RMBS out.
In Australia, we never had rubbish ABS/ RMBS as ADI and non-bank asset origination credit policies and procedures and the legal framework were always incredibly strong. To that end, no investment grade or sub investment grade RMBS has ever lost an investor a cent. Doesn’t mean they can’t, doesn’t mean they won’t, but a 35 plus year record through all sorts of financial market dislocations speaks for itself.
When it comes to investing, do you have any personal mantras or principles that guide your approach?
It’s all about risk adjusted returns. Risk is not something to be scared of as long as you’re being compensated for it, and the exposure to riskier assets is part of a diversified portfolio. One should pursue risk, as long as risk adjusted returns and diversification are justified.
Moving across to the personal side, we like to know more about the person behind the professional.
Melbourne is renowned for its diverse culture and vibrant lifestyle. What aspects of living in Melbourne do you particularly enjoy?
Cafés, restaurants, pubs, art. It’s a cosmopolitan city and having come from Melbourne, lived away for 16 years and come back, just the vibrancy and diversity of what’s on offer in Melbourne is great.
Excellent. Last question. Tony, has being involved in the structured finance world been a good career?
In my time being involved in the structured finance world, it has increasingly come of age. Structured finance also lends itself to my educational background of law, economics and accounting.
So all those things have combined – my education, fixed income knowledge and being involved in different aspects of debt capital markets, including corporate, government, and structured. It’s been a really interesting career.
It’s a thing of wonder that in the latter stages of my career I’d be still interested and still busy.
We’re excited to get to know you better, Tony!
