It feels almost surreal to return to this conference for the umpteenth time and finally sense regulators leaning — if only a little — toward real change. Securitisation, once touted as a founding pillar of the Capital Markets Union, has under‑delivered in its current guise. The instrument itself remains remarkably resilient, performing exactly as designed, STS label or not. Yet investor holdings have collapsed since their pre‑GFC peak. Tellingly, the liveliest corners sit outside the regulation‑blessed arena: CLOs still anchor the public market, while SRTs rule the private one — and KBRA has been active in both.
The moment for reform is now. European securitisation has already proved its worth, fuelling the rise of scores of non‑bank lenders. Recent moves in the U.S. have jolted Europe awake, and Brussels wants to stay in the global race. The Draghi and Noyer reports — our twin guideposts — spell out today’s regulatory shortfalls in stark detail. But rewriting the rulebook is only half the battle; real progress depends on the practitioners gathered each year on Spain’s coast, and on their willingness to push the market forward responsibly.
The year began on a high. After a solid 2024, participants expected an even brighter 2025, and Q1 delivered: transaction flow was brisk, and CLO issuance set an all‑time European first‑quarter record. Then came the terrible Ts — Tariffs, Taxes, and Tentativeness — knocking the market back on its heels. Once a sliver of clarity returned, cloudy though it remains, issuance resumed ahead of this conference. We have since witnessed the CMBS revival, SME and middle‑market CLOs, a Spanish re‑performing loan deal, and a broad array of collateral across Europe.
In my new role as KBRA’s European Macro Strategist, I step back, scan the market, and share my thoughts on the Credit Compass podcast and in our quarterly report, The Forward View. The vista for Europe looks promising. Global investors want to diversify away from an over‑reliance on dollar assets, and Europe — stable, reform‑minded, and growth‑hungry — should be a natural destination. Policymakers are chanting the growth mantra after years of stagnation, and 2025 could mark the turn. Rising defence budgets, proposed German tax cuts, and fresh infrastructure programmes across the bloc should add momentum. Banks sit on thick capital cushions with minimal NPLs. Consumers, having rebuilt savings, are ready to spend. However, the path ahead is not without headwinds. Government debt levels are high, geopolitical tensions are elevated, and internal barriers remain obstacles to change. All told, though, the ingredients for a stronger Europe are starting to come together.
FT Live and AFME Global ABS is our chance to come together and determine how best to harness that momentum. Here we can help shape a diverse and expanding market that channels capital into Europe’s next growth spurt, while advancing diverse perspectives on how to address the challenges that lie before us. One thing remains clear: securitisation can—indeed must — be a cornerstone of European growth.
As always, KBRA will publish daily recaps of the three‑day gathering on kbra.com, with coverage also appearing in GlobalCapital. See you in Barcelona.
Gordon Kerr
European Macro Strategist - KBRA
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