ABS East 2019 Day two
Speaking at ABS East on Monday morning, Allianz Global Investors chief economic advisor Mohamed El-Erian told attendees that a definitive era in the history of financial markets is coming to a close, and that the future is looking highly uncertain.
Market players speaking on a panel on day two of ABS East were sounding the alarm on the possibility that a wave of downgrades could hit CLO collateral over the next three years, testing the market’s ability to withstand an influx of triple-C loans.
Speakers on a panel on day one of ABS East noted that the securitization market has seen a vast expansion in the number of issuers and kinds of assets that are coming to market, but crossover investment has mostly been seen from within the space, rather than from other corners of fixed income.
The non-qualified mortgage RMBS market is expected to double its year-on-year issuance volume in 2019, said speakers at ABS East on Monday, who predicted the sector to outpace other ABS as private capital takes a larger share of the mortgage finance market.
Since bringing transparency to the asset-backed securities secondary market three years ago, the Trade Reporting and Compliance Engine (Trace) from Finra continues to spark debate among ABS traders on whether the service enhances liquidity, or if it is more disruptive than helpful. Panellists speaking on the second day of ABS East were divided on the value of the reporting engine, particularly due to the unintended consequences on more illiquid asset classes.
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