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First exclusively Estonian securitization the European Investment Bank has supported
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Credit hedge funds are looking to finance books of SME loans originated under the UK government’s Coronavirus Business Interruption Loan Scheme (CBILS), subscribing for the equity in private securitization vehicles backed by the loans. The government guarantees are likely to improve the financing terms on offer, boosting returns for funds that can access these assets — but there are still questions over the details of the scheme. -
European securitization bids wanted in competition (BWIC) volume has already reached €4.6bn in 2020, the highest level since JP Morgan's research team began collecting BWIC data in 2016. The secondary market is rallying following an improved equity market and a reopened European primary.
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CNH Capital priced its first securitization of the year on Tuesday, one of the few equipment ABS sponsors to come to market during the Covid-19 outbreak. The company is forecasting the “most severe impact” in the second quarter, with some regions and product lines seeing a 40% decline in demand, CNH said.
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Mercedes-Benz priced its Silver Arrow Compartment 11 ABS auto deal at 40bp for the senior notes, in line with a deal from BMW which reopened the European ABS market last week.
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The European Investment Bank (EIB) has invested in a Portuguese RMBS collateralised by green assets as part of a wider ESG programme. The group has also revealed details of its significant risk transfer (SRT) programme designed to support SME loans during the lockdowns.
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The Bank of England is mulling ways to support businesses left out of Covid-19 support schemes, with a focus on sub-investment grade corporates and encouraging lending into the real economy. A securitization structure is being comtemplated via the setting up of an intermediary bank.
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The Federal Reserve’s Term Asset Backed Securities Loan Facility succeeded in boosting investor confidence and providing a backstop to further spread widening, but sources say that key limitations in the scope of the programme, even with the most recent expansion last week, mean that the benefits have mostly already been felt.
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As the near term outlook for economic reopening remains uncertain, players in the market are expecting a rise in the demand for cars, as delivery services become more heavily relied upon and as a result of hesitation around public transportation that could persist long after the pandemic subsides. In the Covid economy, investors say that supportive fundamentals and well protected ABS structures are making subprime auto bonds an attractive buy.
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The European auto ABS market raced back to life on Thursday with BMW pricing the senior notes of its Bavarian Sky 10 deal on the same day as Mercedes-Benz announced its return to the market with Silver Arrow 11.
