Consumer ABS

The Federal Reserve Board on Thursday unanimously approved the release of a set of proposals that would raise banks' minimum capital requirement to 7%.

If enacted by U.S. regulators as currently drafted, the Simple Supervisory Formula Approach (SSFA) would require banks to give capital risk weightings to securitizations that are sharply higher than those assessed under the longstanding ratings-based approach, according to a presentation by Brian P. Lancaster, co-head of structured transactions at RBS, and John Jordan, from the bank’s financial institutions division.

Credit Suisse intends to publicly place the CHF 237 million ($248mln) senior tranche of a new credit card ABS deal; it will be the first time a Swiss credit card securitization is publicly marketed, according to Fitch Ratings.

Standard & Poor's said in a report today that U.S. credit card securitization volume is up by 156% from volumes issued in 2011.

Despite intense volatility buffeting the Eurozone in recent months, Bank of America Merrill Lynch sees long-term strengths in the region’s structured finance space.

Moody's Investors Service will rate the $259 million of student loan ABS notes to be issued by the State of New Jersey's Higher Education Student Assistance Authority (HESAA).

Bankers are holding out hope for a last minute 'fix' to new capital requirements that will make it much less attractive for European insurers to hold ABS. Insurance companies have become important buyers of European ABS since the financial crisis.

The cost of a college education continues to soar, and the interest rate on government-subsidized student loans is set to double. It would seem like a perfect recipe for more private lending and, by extension, for more securitization of private student loans, which has fallen sharply since the federal government took over this corner of the market two years ago.

Originators of private student loans can't seem to catch a break. Two years ago, the federal government stopped guaranteeing these loans, leaving them unsecured; more recently, there's been a push in Congress to make student loans dischargeable in bankruptcy. The loans are also attracting scrutiny from the recently empowered Consumer Finance Protection Bureau.