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Latest news
◆ Issuance abounds despite Iran-Israel escalation ◆ European securitization regulatory proposals unveiled ◆ A digital first for sovereign bonds
The EC’s regulatory proposals for securitization are broadly positive, but some reforms are questionable
While generally positive, some proposals are raising concerns
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DigitalBridge and Vault Digital Infrastructure emerged in the securitization market on Thursday, satisfying the investor appetite for extra spread during a dry spell for yield. The junior ‘A-2’ notes from DigitalBridge came in with a coupon of 3.93%. -
Banca Carige has structured the first securitization backed by SME loans with Italian state guarantees, provided as part of the government’s support for businesses during the Covid-19 pandemic.
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The European Commission is on the verge of launching its new sustainable finance strategy — the first major fresh initiative since the Sustainable Finance Action Plan of 2018. GlobalCapital has seen a leaked draft, which reveals that the EU will explore whether to create official labels for transition bonds and sustainability-linked bonds, whether to regulate green mortgages, and how to reinforce investors’ responsibility for the effects of their investments.
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After one of the busiest quarters for ABS since the financial crisis, many market participants are eyeing a short break in August in anticipation of a slower market. The combination of working-from-home culture, lack of travel opportunities and physical meetings has prevented many in the market from taking a break.
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Federal and private student loan ABS are among the few securitization sectors trading wider, under pressure from imminent student loan forgiveness policies. While both sectors offer attractive spread pick up above other ABS asset classes, the softness points to mounting concerns that loan forgiveness will not only impact FFELP loans, but private deals too, which depend on a student’s willingness to refinance their federal loans.
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One investor gobbled up an entire $200m whole business securitization offering from Five Guys last week, showing the insatiable appetite for yield in the ABS market. The deal also priced just 50bp wider of where peer issuer Wendy’s priced its deal earlier this month.
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ABS lawyers are asking issuers to resist taking advantage of a legal loophole left via a regulatory quirk, where a number of CLO and CMBS deals are technically exempt from switching data over to the securitization repositories approved by the European Securities and Markets Authority (ESMA) on Friday.
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Accusations of greenwashing have been infrequent in the 14 year old green bond market, which mainly sticks to uncontroversial assets, such as renewable energy and railways. The sustainability-linked bond market is only a toddler, but already a much more difficult child. No wonder: it is handling tougher material.
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Hertz received a very warm welcome back into the ABS market on Thursday, marking the start of a successful emergence out of bankruptcy. The deal, its first since the bankruptcy, was well oversubscribed and priced much tighter than initial pricing thoughts, showing the comfort and interest investors had towards it.
