Tightenting Of Yields Puts A Damper On Liquidity Celebration
With the return of liquidity in the secondary asset-backed securities market, the question many market players are now facing is how to find value in the new low-yield environment.
Given the rise in prices and tightening of yield caused by the PPIP over the last several months, the number of PPIP managers willing to invest has now decreased, Calabrese noted. But Gurley believes that attractive opportunities for PPIP managers still exist. "The leverage that you get from the Treasury really adds significantly to the returns and makes these assets still attractive," she said. There is still significant distress in some of the underlying assets, and delinquencies continues to rise, but "now that we have two years of good data, we are able to start making better predictions toward the outcome, and it gives us a lot more comfort in the prices we're buying them at," Gurley concluded.