Six months into its inception, the ‘simple, transparent and standardised’ (STS) securitization framework seems to be doing its job. It has successfully established a market set to inherit the majority of ABS issuance, with issuers noting a raft of new investors operating in the sector. But have those buyers made a wrong assumption about how the ECB views STS deals?
STS deals are eligible for repo with the European Central Bank (ECB), and as such they are pricing tight. The recent Argenta Spaarbank Green Apple Dutch RMBS moved tighter despite its long duration. All looks to be going smoothly with the scheme.
But under the surface, the