Consumer ABS

For years, U.S. banks, and especially the largest ones, have dreaded the seemingly inevitable arrival of new and more burdensome regulatory capital requirements. U.S. banking regulators' proposal to revamp those requirements, issued in mid-June, should dispel many of their fears, although the proposal is likely to result in extra work for U.S. banks and may put them at a disadvantage to global competitors in the ABS market.

As the New York Federal Reserve moves closer to completing the winding down of its Maiden Lane (ML) vehicles, investors face a falloff in inventory volumes. This poses a further challenge in this yield-starved environment.

By the end of this year, RMBS issuers keen on obtaining funding from the European Central Bank, as well as those already using these securities as collateral in sale and repurchase agreements, will need to input data on the underlying mortgages into the newly created European DataWarehouse, known pithily as ED.

Scheduled to launch later this year, the European DataWarehouse will, for the first time, house loan-level data on a wide range of loans backing the region's ABS. The European Central Bank is the information repository's biggest client and champion.

Given that the subprime auto ABS market has rebounded in the last three years, Wells Fargo believes that the new-issue volume in the sector “should easily” exceed last year’s $12.6 billion.

The securitization market kicks off this week the way it usually does nowadays — with an auto ABS transaction.

Barclays Capital analysts believe that the temporary and minor increase in prepayments from the Special Direct Consolidation program will have a limited effect on FFELP ABS bond valuations, according to the firm’s latest Consumer ABS Weekly.

Auto ABS net loss rates were 0.89% as of May 2012, increasing four basis points from April, Standard & Poor's said in a report released Friday. The previous month had the lowest rate since the rating agency started tracking them in 2006.

Canadian Imperial Bank of Commerce (CIBC) has added a C$200 million ($197 million) revolving auto dealer floorplan facility to its SAFE Canadian ABCP.

The U.S. higher education sector is currently facing developing risks such as increased regulatory scrutiny, accreditation tightening, technology challenges, and governance conflicts, according to a Moody’s Investors Service mid-year outlook on the sector released today.