Standard & Poor's is looking to hire one or two professionals to work in its servicer evaluations group, in new positions. Michael Gutierrez, head of the group in New York, says the rating agency, which currently has a seven-member group that rates servicers of structured finance transactions, will add the hires to its ranks to meet an expected increase in demand for the servicer rankings on asset-backed issuers. ABS pros say servicers are viewed as increasingly important participants in a transaction, particularly among sub-prime lenders, since they collect the receivables that are used to repay bondholders and can be affected by problems at the corporate level.
While S&P has to date ranked the servicing capabilities of issuers that are relatively one-off, Gutierrez says it has been approached by issuers in ABS sectors, and predicts a pending servicer report on MBNA America Bank, the second-largest credit card issuer, will be the tip of the iceberg. "We expect this to be the beginning of a trend in some of the larger asset classes, and this will put some subtle pressure on them to get rated," he states, noting the MBNA rating will be available in the next two months or so.
The rating agency will assign a "strong" servicer rating to MBNA, he adds. While some might already assume this given the bank's balance sheet, Gutierrez says size doesn't necessarily matter. "The size of an entity doesn't mean it is strong," he notes. S&P charges $30,000 for a servicer evaluation and the process takes 60 to 90 days, he adds.