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The emergence of a rare tobacco settlement securitization deal in the US this week should raise questions about the perversity of these deals.
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Total European Central Bank asset purchases may have topped €1tr, but the much maligned ABS purchase programme is still barely treading water. Loosening the bank’s buying criteria might help, if central bankers are serious about the scheme. -
It’s not just the level of delinquencies in subprime auto ABS — which in March hit a record high — that threatens to put the securitization industry back in the spotlight of public disapproval.
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Janet Yellen’s August 26 speech at the Jackson Hole Economic summit once again suggested the imminent arrival of rate hikes, but it’s an act which the market is beginning to tire of.
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It’s hard to shed too many tears when a leveraged private equity company with stacks of non-recourse debt transforms into a respectable listed investment grade corporate, with the attendant switch from mammoth securitization financings to regular unsecured vanilla bonds. But monetary policy is now systematically pushing in this direction.
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Private executions, club deals, non-disclosure agreements and bilateral executions all have their place in the arsenals of syndicate desks and issuers, particularly in the securitization market. But taken together, they are harmful to the market.
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Investors in non-performing loan securitizations are a rare find, so issuers which can move early might be better placed to grab some of the limited capital available.
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There's no true political will to end the dominance of Freddie Mac and Fannie Mae in RMBS. The talk in Washington of restoring the private label RMBS market is driven more by a philosophical push against smaller government than by a coherent plan for change, or a willingness to face the trade-offs it requires.
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The UK’s RMBS market shrugged off Brexit. Whether it can survive the Bank of England’s new Term Funding Scheme (TFS) is another matter.
