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A whole market will meet at Global ABS but don't expect that to break the ice

Barcelona beach on morning sunrise

Summer issuance will remain patchy after Barcelona conference

With Barcelona’s Global ABS conference just days away, excitement in the securitization market is building.

As one guest told GlobalCapital’s brand new securitization podcast, Another Fine Mezz, Global ABS is a place where people in the industry come together and build relationships.

The hope, therefore, is that in a convention centre in Catalonia, a consensus will emerge between investors and issuers for public deals to pick up once more.

This is wishful thinking.

There is a wide discrepancy between the levels an issuer is willing to accept and how an investor expects to be compensated for the increased risk and volatility in the market.

As one bank researcher said, if you know that next week’s deals will be 20bp wider, why would you buy today?

And equally, if you don’t have desperate funding needs this summer and can hold out hope for more reasonable levels in the autumn, why would you issue now?

The expectation remains that issuance will be slow until September, with the market likely to undergo a recovery period similar to March after Russia’s invasion of Ukraine.

Pre-placed deals will be common, before partially placed and eventually fully offered deals return. This time, summer holidays need to be accounted for too.

Networking with a sangria is lovely and doubtless tentative deals will be struck but business is business. When the Barcelona delegates are back at their desks, the market will still be volatile, and deals will still be difficult.

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