European issuers of mortgage-related collateral will likely begin to target the U.S. investor base this year, according to panelists who discussed the European structured finance market. Issuers would do so to find alternative funding sources as the European market continues to grow at a double-digit rate. Issuance of European securitizations rose to roughly $175 billion last year. The U.S. market sets the standard in asset-backeds, meaning issuers are always looking to tap into it, they added. Plus, mortgage-related issuers from other countries, such as Australia, have been successful in raising money in the U.S. market.
Kees van Kalveen, head of mortgage finance and asset securitization at Holland's NIB Capital Bank, said he expects to see a Dutch issuer sell dollar-denominated bonds either this year or next year, although he did not say if NIB plans to do so.
However, other panelists cautioned that the underlying characteristics of mortgages originated in Holland and Europe are quite different from those originated in the U.S. Stephen Hynes, a director in capital markets at GMAC-RFC, noted the Dutch market incentivizes even prime-rate homeowners to borrow as much as possible, leading to debts that contain higher loan-to-value ratios. As such, prime collateral contains LTV levels that are more consistent with those found among subprime borrowers in the U.S.
