ECB move is a start, but only a start
The European Central Bank’s decision to tweak repo haircuts in favour of ABS, at the expense of retained covered bonds, should help to encourage issuers in Europe’s periphery to test market appetite for both ABS and covered bonds.
But it is particularly helpful for the ABS market, which since 2007 has suffered barely any losses at the senior level in Europe but which has been stigmatised because of its unfortunate association with US sub-prime.
The ECB’s positive signalling is a reflection of the securitization industry’s efforts to
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