ABS market participants have seen one of European fixed-income's more remarkable bull runs over the past two years. Year-on-year growth across all securitised asset classes has been robust, and new investors are still being reported in primary issues.
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What has grown into a €250bn market place now faces immense challenges in the form of new regulations, while coming to terms with what many see as the end of a remarkable bull run. All sides of the ABS market should really now grow beyond RMBS flow product. Alex Chambers explores the medium-term outlook for a structured finance market at a crossroads.
The investor base for European ABS has grown exponentially. With 90% of all ABS product rated Triple A, much of the attention has been focused on senior product. However, the dawning of a new regulatory and accounting era has created the pre-conditions for a growing market in the lowest echelons of the capital structure. Joti Mangat reports.
The US ABS sector should be able to absorb additional auto issuance from General Motors and Ford as these companies find themselves forced to finance business via the securitisation markets. But as this issuance is expected to climb, spreads are likely to widen further and tiering will continue between foreign automakers and American bonds well into the year. By John D’Antona.
Certain CDO investors stand accused of not fully understanding the products they are buying. At what could be a pivotal point in the credit cycle, the explosive growth in this sector and higher degrees of leverage raises some important questions both for these investors and for the health of the wider financial system. By David Bentley.
The US synthetic CDO sector is expanding rapidly, but not without volatility. Spreads have both widened and rallied notably in 2005, causing some to second-guess the credit environment. But new issuance has been sustained and an emphasis on incorporating the paper into cash deals has become prevalent. By Chris DeReza.
The returns available for investment banks involved in Asian securitisation have fallen a long way in recent years, and the growing importance of local currency transactions means the fall in fees is set to continue. Matthew Davies looks at the extent of these developments.
After years of unfulfilled promises, the market for securitisation in Indonesia may be about to take off. Structured finance specialists have finally been successful in lobbying the Indonesian authorities to look favourably on ABS deals. But as Luc Mongeon reports, the market’s development will only be gradual, as investors remain wary.
Australian RMBS spreads have reached their narrows and are unlikely to dramatically widen any time soon. Given the prospects of a A$24bn liquidity boost due to bond maturities and coupon payments, domestic investors should consider shedding their recent aversion to the product. At least that is the view of many bankers, as Shankar Ramakrishnan reports.
RMBS has played a predominant role in the expansion of Japan’s securitisation market over the past two years. While private sector issuance led the surge in fiscal-year 2004, attention has turned toward the public sector for 2005, starting with the Government Housing Loan Corp. Nick Herbert and Julia Okuda examine the prospects.
The SEC delivered a qualified boost to the UK RMBS market earlier this year when, ahead of schedule, it published its rules governing ABS registration and disclosure. Joti Mangat sounded out legal opinion over the impact of the rules on the US distribution of the UK master trusts.