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.
In this month's cover story, Felipe Ossa looks at the hows and whys of the new project.
Although the U.S.'s mortgage sector is more advanced in terms of providing this type of data to investors, what the Europeans have been able to demonstrate is how regulators and the private sector can work closely together to give securitization a fighting chance in today's dysfunctional markets.
Despite initial resistance to the initiative - the Dutch banks have said they would not be shareholders in the warehouse - many European securitization players are ready to push forward, with RMBS the first asset class to have collateral loaded in.
On the home front, John Hintze reports that the new 700-page Basel proposal with comments due on Sept. 7 holds pleasant surprises for the securitization industry. Laurie Goodman, the head of RMBS strategy at broker-dealer Amherst Securities, said the requirements in this new version provide a more rational framework than either the one regulators proposed last year or, prior to that, the ratings-based approach.
What's more, John explains that the proposal's less severe capital charges for lower-rated ABS should result in banks shifting their investments to these securities, which offer them a considerable yield pick-up.
Elsewhere in securitization, Nora Colomer tackles an asset class that is experiencing a revival after a long hiatus - small business loan ABS. Nonbank lenders, who filled the void left by commercial banks in this business, need securitization to increase their access to funding and to grow their lending volumes. Nora explores the motivation for these issuers and how the securitization of loans from a component of this market - the SBA 7(a) loans - was dormant until nine months ago, when the first of three deals appeared.
There's action in other classes of securitized products as well. In his other story, John says that traditional private ABS issuers, at least the bigger ones, are tapping banks and 144A investors. That's because issuers have more options, with rated ABS deals back in fashion and bank financing more readily available.
Because of this, the private market is now hosting smaller deals backed by "off-the-run" and less common asset classes including music library receivables, delinquent tax returns and truck leases.
While smaller assets are capturing some attention, much of the structured finance conversation still turns on agency securities and where they're headed.
The American Securitization Forum recently released a white paper that outlines issues behind the proposal to create a single security by merging Fannie and Freddie's issuance platforms.
Bill Berliner in his column says that the underlying object of creating one security is to lessen the pricing disadvantage that has torpedoed Freddie's ability to price and securitize loans.
Bill discusses the implication of making these two separate entities issue one type of product and concludes that allowing the GSEs to separately determine their pricing is still the best way.